Correlation Between National Health and US GoldMining

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

Diversification Opportunities for National Health and US GoldMining

0.18

Correlation Coefficient

National Health  US GoldMining

Average diversification

The 3 months correlation between National and USGO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and US GoldMining Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GoldMining Common 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 US GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GoldMining Common has no effect on the direction of National Health i.e., National Health and US GoldMining go up and down completely randomly.

Pair Corralation between National Health and US GoldMining

Considering the 90-day investment horizon National Health Investors is expected to generate 0.28 times more return on investment than US GoldMining. However, National Health Investors is 3.61 times less risky than US GoldMining. It trades about 0.31 of its potential returns per unit of risk. US GoldMining Common is currently generating about 0.02 per unit of risk. If you would invest  6,194  in National Health Investors on April 28, 2024 and sell it today you would earn a total of  1,313  from holding National Health Investors or generate 21.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

National Health Investors  vs.  US GoldMining Common

National Health Investors

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Investors are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, National Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

US GoldMining Common

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US GoldMining Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, US GoldMining is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with National Health and US GoldMining

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

The idea behind National Health Investors and US GoldMining Common 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.