Correlation Between National Health and Comcast

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

Diversification Opportunities for National Health and Comcast

-0.24

Correlation Coefficient

National Health  Comcast

Very good diversification

The 3 months correlation between National and Comcast is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Comcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast 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 Comcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast has no effect on the direction of National Health i.e., National Health and Comcast go up and down completely randomly.

Pair Corralation between National Health and Comcast

Assuming the 90 days trading horizon National Health Investors is expected to under-perform the Comcast. In addition to that, National Health is 1.08 times more volatile than Comcast. It trades about -0.05 of its total potential returns per unit of risk. Comcast is currently generating about 0.06 per unit of volatility. If you would invest  3,533  in Comcast on September 13, 2024 and sell it today you would earn a total of  208.00  from holding Comcast or generate 5.89% 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.  Comcast

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Comcast

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Comcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with National Health and Comcast

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

The idea behind National Health Investors and Comcast 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.