Correlation Between Simon Property and National Health

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

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

Diversification Opportunities for Simon Property and National Health

-0.38

Correlation Coefficient

Simon Property  National Health

Very good diversification

The 3 months correlation between Simon and National is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors and Simon Property 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 Simon Property Group are associated (or correlated) with National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Simon Property i.e., Simon Property and National Health go up and down completely randomly.

Pair Corralation between Simon Property and National Health

Considering the 90-day investment horizon Simon Property Group is expected to under-perform the National Health. In addition to that, Simon Property is 1.05 times more volatile than National Health Investors. It trades about -0.02 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.11 per unit of volatility. If you would invest  6,802  in National Health Investors on December 28, 2024 and sell it today you would earn a total of  668.00  from holding National Health Investors or generate 9.82% return on investment over 90 days.

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

Simon Property Group  vs.  National Health Investors

Simon Property Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

National Health Investors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Health Investors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, National Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Simon Property and National Health

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

The idea behind Simon Property Group and National Health Investors 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.