Correlation Between LTC Properties and National Health
Can any of the company-specific risk be diversified away by investing in both LTC Properties and National Health 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 LTC Properties and National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LTC Properties and National Health Investors, you can compare the effects of market volatilities on LTC Properties and National Health 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 LTC Properties with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTC Properties and National Health.
Diversification Opportunities for LTC Properties and National Health
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LTC and National is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding LTC Properties and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors and LTC Properties 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 LTC Properties are associated (or correlated) with National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of LTC Properties i.e., LTC Properties and National Health go up and down completely randomly.
Pair Corralation between LTC Properties and National Health
Assuming the 90 days horizon LTC Properties is expected to generate 0.91 times more return on investment than National Health. However, LTC Properties is 1.1 times less risky than National Health. It trades about 0.09 of its potential returns per unit of risk. National Health Investors is currently generating about -0.05 per unit of risk. If you would invest 3,300 in LTC Properties on September 12, 2024 and sell it today you would earn a total of 262.00 from holding LTC Properties or generate 7.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
LTC Properties vs. National Health Investors
Performance |
Timeline |
LTC Properties |
National Health Investors |
LTC Properties and National Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LTC Properties and National Health
The main advantage of trading using opposite LTC Properties and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTC Properties position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.LTC Properties vs. GLG LIFE TECH | LTC Properties vs. Global Ship Lease | LTC Properties vs. Motorcar Parts of | LTC Properties vs. CarsalesCom |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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