Correlation Between Sharecare and National Research

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

By analyzing existing cross correlation between Sharecare and National Research Corp, you can compare the effects of market volatilities on Sharecare and National Research 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 Sharecare with a short position of National Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharecare and National Research.

Diversification Opportunities for Sharecare and National Research

-0.63

Correlation Coefficient

Sharecare  National Research

Excellent diversification

The 3 months correlation between Sharecare and National is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sharecare and National Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Research Corp and Sharecare 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 Sharecare are associated (or correlated) with National Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Research Corp has no effect on the direction of Sharecare i.e., Sharecare and National Research go up and down completely randomly.

Pair Corralation between Sharecare and National Research

Given the investment horizon of 90 days Sharecare is expected to generate 2.65 times more return on investment than National Research. However, Sharecare is 2.65 times more volatile than National Research Corp. It trades about 0.0 of its potential returns per unit of risk. National Research Corp is currently generating about -0.07 per unit of risk. If you would invest  254.00  in Sharecare on October 22, 2024 and sell it today you would lose (111.00) from holding Sharecare or give up 43.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.7%
Values	Daily Returns

Sharecare  vs.  National Research Corp

Sharecare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharecare has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Sharecare is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

National Research Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, National Research is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sharecare and National Research

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

The idea behind Sharecare and National Research Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.