Correlation Between National HealthCare and Kellanova
Can any of the company-specific risk be diversified away by investing in both National HealthCare and Kellanova 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 HealthCare and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National HealthCare and Kellanova, you can compare the effects of market volatilities on National HealthCare and Kellanova 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 HealthCare with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of National HealthCare and Kellanova.
Diversification Opportunities for National HealthCare and Kellanova
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Kellanova is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding National HealthCare and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and National HealthCare 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 HealthCare are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of National HealthCare i.e., National HealthCare and Kellanova go up and down completely randomly.
Pair Corralation between National HealthCare and Kellanova
Considering the 90-day investment horizon National HealthCare is expected to generate 1.28 times less return on investment than Kellanova. In addition to that, National HealthCare is 1.07 times more volatile than Kellanova. It trades about 0.17 of its total potential returns per unit of risk. Kellanova is currently generating about 0.23 per unit of volatility. If you would invest 7,382 in Kellanova on June 9, 2024 and sell it today you would earn a total of 627.00 from holding Kellanova or generate 8.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
National HealthCare vs. Kellanova
Performance |
Timeline |
National HealthCare |
Kellanova |
National HealthCare and Kellanova Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National HealthCare and Kellanova
The main advantage of trading using opposite National HealthCare and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National HealthCare position performs unexpectedly, Kellanova 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 Kellanova will offset losses from the drop in Kellanova's long position.National HealthCare vs. The Ensign Group | National HealthCare vs. US Physicalrapy | National HealthCare vs. Cass Information Systems | National HealthCare vs. Brookdale Senior Living |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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