Correlation Between National HealthCare and Select Medical
Can any of the company-specific risk be diversified away by investing in both National HealthCare and Select Medical 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 Select Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National HealthCare and Select Medical Holdings, you can compare the effects of market volatilities on National HealthCare and Select Medical 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 Select Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of National HealthCare and Select Medical.
Diversification Opportunities for National HealthCare and Select Medical
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Select is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding National HealthCare and Select Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Medical Holdings 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 Select Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Medical Holdings has no effect on the direction of National HealthCare i.e., National HealthCare and Select Medical go up and down completely randomly.
Pair Corralation between National HealthCare and Select Medical
Considering the 90-day investment horizon National HealthCare is expected to generate 0.81 times more return on investment than Select Medical. However, National HealthCare is 1.24 times less risky than Select Medical. It trades about -0.04 of its potential returns per unit of risk. Select Medical Holdings is currently generating about -0.17 per unit of risk. If you would invest 9,249 in National HealthCare on January 31, 2024 and sell it today you would lose (121.00) from holding National HealthCare or give up 1.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
National HealthCare vs. Select Medical Holdings
Performance |
Timeline |
National HealthCare |
Select Medical Holdings |
National HealthCare and Select Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National HealthCare and Select Medical
The main advantage of trading using opposite National HealthCare and Select Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National HealthCare position performs unexpectedly, Select Medical 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 Select Medical will offset losses from the drop in Select Medical's long position.National HealthCare vs. The Ensign Group | National HealthCare vs. US Physicalrapy | National HealthCare vs. ATRION | National HealthCare vs. Cass Information Systems |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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