Correlation Between National Health and BROOKFBH 462

Can any of the company-specific risk be diversified away by investing in both National Health and BROOKFBH 462 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 BROOKFBH 462 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 BROOKFBH 462 PRSNU, you can compare the effects of market volatilities on National Health and BROOKFBH 462 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 BROOKFBH 462. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and BROOKFBH 462.

Diversification Opportunities for National Health and BROOKFBH 462

-0.45

Correlation Coefficient

National Health  BROOKFBH 462

Very good diversification

The 3 months correlation between National and BROOKFBH is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and BROOKFBH 462 PRSNU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFBH 462 PRSNU 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 BROOKFBH 462. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFBH 462 PRSNU has no effect on the direction of National Health i.e., National Health and BROOKFBH 462 go up and down completely randomly.

Pair Corralation between National Health and BROOKFBH 462

Assuming the 90 days trading horizon National Health Investors is expected to under-perform the BROOKFBH 462. But the stock apears to be less risky and, when comparing its historical volatility, National Health Investors is 1.48 times less risky than BROOKFBH 462. The stock trades about -0.03 of its potential returns per unit of risk. The BROOKFBH 462 PRSNU is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,378  in BROOKFBH 462 PRSNU on September 12, 2024 and sell it today you would earn a total of  60.00  from holding BROOKFBH 462 PRSNU or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.56%
Values	Daily Returns

National Health Investors  vs.  BROOKFBH 462 PRSNU

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BROOKFBH 462 PRSNU

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BROOKFBH 462 PRSNU are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BROOKFBH 462 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with National Health and BROOKFBH 462

The main advantage of trading using opposite National Health and BROOKFBH 462 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, BROOKFBH 462 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 BROOKFBH 462 will offset losses from the drop in BROOKFBH 462's long position.

The idea behind National Health Investors and BROOKFBH 462 PRSNU pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.