Correlation Between Medical Properties and First
Can any of the company-specific risk be diversified away by investing in both Medical Properties and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on Medical Properties and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and First.
Diversification Opportunities for Medical Properties and First
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Medical and First is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Medical Properties i.e., Medical Properties and First go up and down completely randomly.
Pair Corralation between Medical Properties and First
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 1.09 times more return on investment than First. However, Medical Properties is 1.09 times more volatile than First Class Metals. It trades about 0.21 of its potential returns per unit of risk. First Class Metals is currently generating about 0.02 per unit of risk. If you would invest 377.00 in Medical Properties Trust on October 24, 2024 and sell it today you would earn a total of 60.00 from holding Medical Properties Trust or generate 15.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Medical Properties Trust vs. First Class Metals
Performance |
| Timeline |
| Medical Properties Trust |
| First Class Metals |
Medical Properties and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and First
The main advantage of trading using opposite Medical Properties and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| Medical Properties vs. Toyota Motor Corp | Medical Properties vs. SoftBank Group Corp | Medical Properties vs. OTP Bank Nyrt | Medical Properties vs. ONEOK Inc |
| First vs. Symphony Environmental Technologies | First vs. Playtech Plc | First vs. Compagnie Plastic Omnium | First vs. Made Tech Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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