Correlation Between National Health and Armada Hflr

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

Diversification Opportunities for National Health and Armada Hflr

0.62

Correlation Coefficient

National Health  Armada Hflr

Poor diversification

The 3 months correlation between National and Armada is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr 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 Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of National Health i.e., National Health and Armada Hflr go up and down completely randomly.

Pair Corralation between National Health and Armada Hflr

Considering the 90-day investment horizon National Health Investors is expected to generate 0.89 times more return on investment than Armada Hflr. However, National Health Investors is 1.13 times less risky than Armada Hflr. It trades about 0.07 of its potential returns per unit of risk. Armada Hflr Pr is currently generating about 0.0 per unit of risk. If you would invest  4,681  in National Health Investors on October 5, 2024 and sell it today you would earn a total of  2,231  from holding National Health Investors or generate 47.66% return on investment over 90 days.

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

National Health Investors  vs.  Armada Hflr Pr

National Health Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Health Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with National Health and Armada Hflr

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

The idea behind National Health Investors and Armada Hflr Pr 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.