Correlation Between SCOTTIE RESOURCES and National Health

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

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

Diversification Opportunities for SCOTTIE RESOURCES and National Health

0.38

Correlation Coefficient

SCOTTIE RESOURCES  National Health

Weak diversification

The 3 months correlation between SCOTTIE and National is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SCOTTIE RESOURCES P 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 SCOTTIE RESOURCES 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 SCOTTIE RESOURCES P 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 SCOTTIE RESOURCES i.e., SCOTTIE RESOURCES and National Health go up and down completely randomly.

Pair Corralation between SCOTTIE RESOURCES and National Health

Assuming the 90 days horizon SCOTTIE RESOURCES P is expected to under-perform the National Health. In addition to that, SCOTTIE RESOURCES is 21.97 times more volatile than National Health Investors. It trades about -0.13 of its total potential returns per unit of risk. National Health Investors is currently generating about -0.51 per unit of volatility. If you would invest  7,350  in National Health Investors on September 22, 2024 and sell it today you would lose (750.00) from holding National Health Investors or give up 10.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

SCOTTIE RESOURCES P  vs.  National Health Investors

SCOTTIE RESOURCES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCOTTIE RESOURCES P 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SCOTTIE RESOURCES and National Health

The main advantage of trading using opposite SCOTTIE RESOURCES and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTTIE RESOURCES 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 SCOTTIE RESOURCES P 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.