Correlation Between Global Net and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both Global Net and Target Healthcare 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 Global Net and Target Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Target Healthcare REIT, you can compare the effects of market volatilities on Global Net and Target Healthcare 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 Global Net with a short position of Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Target Healthcare.
Diversification Opportunities for Global Net and Target Healthcare
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Target is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT and Global Net 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 Global Net Lease are associated (or correlated) with Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Global Net i.e., Global Net and Target Healthcare go up and down completely randomly.
Pair Corralation between Global Net and Target Healthcare
Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Target Healthcare. In addition to that, Global Net is 1.44 times more volatile than Target Healthcare REIT. It trades about -0.08 of its total potential returns per unit of risk. Target Healthcare REIT is currently generating about -0.11 per unit of volatility. If you would invest 8,844 in Target Healthcare REIT on August 31, 2024 and sell it today you would lose (474.00) from holding Target Healthcare REIT or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Target Healthcare REIT
Performance |
| Timeline |
| Global Net Lease |
| Target Healthcare REIT |
Global Net and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Target Healthcare
The main advantage of trading using opposite Global Net and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare's long position.| Global Net vs. Neometals | Global Net vs. Coor Service Management | Global Net vs. Aeorema Communications Plc | Global Net vs. JLEN Environmental Assets |
| Target Healthcare vs. Westlake Chemical Corp | Target Healthcare vs. Zegona Communications Plc | Target Healthcare vs. Arrow Electronics | Target Healthcare vs. Air Products Chemicals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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