Correlation Between Easterly Government and NATIONAL HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both Easterly Government and NATIONAL HEALTHCARE 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 Easterly Government and NATIONAL HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Easterly Government Properties and NATIONAL HEALTHCARE, you can compare the effects of market volatilities on Easterly Government and NATIONAL HEALTHCARE 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 Easterly Government with a short position of NATIONAL HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easterly Government and NATIONAL HEALTHCARE.

Diversification Opportunities for Easterly Government and NATIONAL HEALTHCARE

0.31

Correlation Coefficient

Easterly Government  NATIONAL HEALTHCARE

Weak diversification

The 3 months correlation between Easterly and NATIONAL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Easterly Government Properties and NATIONAL HEALTHCARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL HEALTHCARE and Easterly Government 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 Easterly Government Properties are associated (or correlated) with NATIONAL HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL HEALTHCARE has no effect on the direction of Easterly Government i.e., Easterly Government and NATIONAL HEALTHCARE go up and down completely randomly.

Pair Corralation between Easterly Government and NATIONAL HEALTHCARE

Assuming the 90 days horizon Easterly Government is expected to generate 2.09 times less return on investment than NATIONAL HEALTHCARE. But when comparing it to its historical volatility, Easterly Government Properties is 1.35 times less risky than NATIONAL HEALTHCARE. It trades about 0.02 of its potential returns per unit of risk. NATIONAL HEALTHCARE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,735  in NATIONAL HEALTHCARE on October 24, 2024 and sell it today you would earn a total of  915.00  from holding NATIONAL HEALTHCARE or generate 10.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Easterly Government Properties  vs.  NATIONAL HEALTHCARE

Easterly Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Easterly Government Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NATIONAL HEALTHCARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL HEALTHCARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Easterly Government and NATIONAL HEALTHCARE

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

The idea behind Easterly Government Properties and NATIONAL HEALTHCARE 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.