Correlation Between National Health and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both National Health and Tokyo Electron at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Health and Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Tokyo Electron Limited, you can compare the effects of market volatilities on National Health and Tokyo Electron and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in National Health with a short position of Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Tokyo Electron.
Diversification Opportunities for National Health and Tokyo Electron
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Tokyo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron and National Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on National Health Investors are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of National Health i.e., National Health and Tokyo Electron go up and down completely randomly.
Pair Corralation between National Health and Tokyo Electron
Assuming the 90 days trading horizon National Health Investors is expected to generate 0.74 times more return on investment than Tokyo Electron. However, National Health Investors is 1.35 times less risky than Tokyo Electron. It trades about 0.03 of its potential returns per unit of risk. Tokyo Electron Limited is currently generating about 0.01 per unit of risk. If you would invest 7,063 in National Health Investors on September 3, 2024 and sell it today you would earn a total of 187.00 from holding National Health Investors or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Tokyo Electron Limited
Performance |
| Timeline |
| National Health Investors |
| Tokyo Electron |
National Health and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Tokyo Electron
The main advantage of trading using opposite National Health and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, Tokyo Electron can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Tokyo Electron vs. Ares Management Corp | Tokyo Electron vs. Flutter Entertainment PLC | Tokyo Electron vs. National Health Investors | Tokyo Electron vs. ATRESMEDIA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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