Correlation Between National Health and United Natural
Can any of the company-specific risk be diversified away by investing in both National Health and United Natural 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 United Natural 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 United Natural Foods, you can compare the effects of market volatilities on National Health and United Natural 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 United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and United Natural.
Diversification Opportunities for National Health and United Natural
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and United is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of National Health i.e., National Health and United Natural go up and down completely randomly.
Pair Corralation between National Health and United Natural
Assuming the 90 days trading horizon National Health is expected to generate 4.78 times less return on investment than United Natural. But when comparing it to its historical volatility, National Health Investors is 1.04 times less risky than United Natural. It trades about 0.07 of its potential returns per unit of risk. United Natural Foods is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,888 in United Natural Foods on September 1, 2024 and sell it today you would earn a total of 402.00 from holding United Natural Foods or generate 21.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. United Natural Foods
Performance |
| Timeline |
| National Health Investors |
| United Natural Foods |
National Health and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and United Natural
The main advantage of trading using opposite National Health and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, United Natural 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 United Natural will offset losses from the drop in United Natural's long position.| National Health vs. NTG Nordic Transport | National Health vs. Transport International Holdings | National Health vs. EVS Broadcast Equipment | National Health vs. COPLAND ROAD CAPITAL |
| United Natural vs. Sysco | United Natural vs. Jernimo Martins SGPS | United Natural vs. Bunzl plc | United Natural vs. Performance Food Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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