Correlation Between NATIONAL HEALTHCARE and Glencore PLC

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

By analyzing existing cross correlation between NATIONAL HEALTHCARE and Glencore PLC, you can compare the effects of market volatilities on NATIONAL HEALTHCARE and Glencore PLC 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 Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL HEALTHCARE and Glencore PLC.

Diversification Opportunities for NATIONAL HEALTHCARE and Glencore PLC

0.7

Correlation Coefficient

NATIONAL HEALTHCARE  Glencore PLC

Poor diversification

The 3 months correlation between NATIONAL and Glencore is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL HEALTHCARE and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC 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 Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC has no effect on the direction of NATIONAL HEALTHCARE i.e., NATIONAL HEALTHCARE and Glencore PLC go up and down completely randomly.

Pair Corralation between NATIONAL HEALTHCARE and Glencore PLC

Assuming the 90 days trading horizon NATIONAL HEALTHCARE is expected to under-perform the Glencore PLC. But the stock apears to be less risky and, when comparing its historical volatility, NATIONAL HEALTHCARE is 1.13 times less risky than Glencore PLC. The stock trades about -0.21 of its potential returns per unit of risk. The Glencore PLC is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  427.00  in Glencore PLC on December 22, 2024 and sell it today you would lose (68.00) from holding Glencore PLC or give up 15.93% of portfolio value over 90 days.

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

NATIONAL HEALTHCARE  vs.  Glencore PLC

NATIONAL HEALTHCARE

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Glencore PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NATIONAL HEALTHCARE and Glencore PLC

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

The idea behind NATIONAL HEALTHCARE and Glencore PLC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.