Correlation Between Medical Properties and AES Corp
Can any of the company-specific risk be diversified away by investing in both Medical Properties and AES Corp 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 Medical Properties and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust and AES Corp, you can compare the effects of market volatilities on Medical Properties and AES Corp 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 Medical Properties with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and AES Corp.
Diversification Opportunities for Medical Properties and AES Corp
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Medical and AES is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and Medical Properties 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 Medical Properties Trust are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Medical Properties i.e., Medical Properties and AES Corp go up and down completely randomly.
Pair Corralation between Medical Properties and AES Corp
Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the AES Corp. But the stock apears to be less risky and, when comparing its historical volatility, Medical Properties Trust is 1.11 times less risky than AES Corp. The stock trades about -0.2 of its potential returns per unit of risk. The AES Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,347 in AES Corp on September 14, 2024 and sell it today you would earn a total of 11.00 from holding AES Corp or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Properties Trust vs. AES Corp
Performance |
| Timeline |
| Medical Properties Trust |
| AES Corp |
Medical Properties and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and AES Corp
The main advantage of trading using opposite Medical Properties and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| Medical Properties vs. Neometals | Medical Properties vs. Metals Exploration Plc | Medical Properties vs. Sunny Optical Technology | Medical Properties vs. Auction Technology Group |
| AES Corp vs. Playtech Plc | AES Corp vs. Wyndham Hotels Resorts | AES Corp vs. Medical Properties Trust | AES Corp vs. Melia Hotels |
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 CEOs Directory module to screen CEOs from public companies around the world.
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