Correlation Between Medical Properties and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Medical Properties and Reckitt Benckiser 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 Reckitt Benckiser 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 Reckitt Benckiser Group, you can compare the effects of market volatilities on Medical Properties and Reckitt Benckiser 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 Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Reckitt Benckiser.
Diversification Opportunities for Medical Properties and Reckitt Benckiser
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Medical and Reckitt is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser 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 Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Medical Properties i.e., Medical Properties and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Medical Properties and Reckitt Benckiser
Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the Reckitt Benckiser. In addition to that, Medical Properties is 3.34 times more volatile than Reckitt Benckiser Group. It trades about -0.1 of its total potential returns per unit of risk. Reckitt Benckiser Group is currently generating about -0.08 per unit of volatility. If you would invest 494,500 in Reckitt Benckiser Group on September 4, 2024 and sell it today you would lose (8,600) from holding Reckitt Benckiser Group or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Properties Trust vs. Reckitt Benckiser Group
Performance |
| Timeline |
| Medical Properties Trust |
| Reckitt Benckiser |
Medical Properties and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Reckitt Benckiser
The main advantage of trading using opposite Medical Properties and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.| Medical Properties vs. Samsung Electronics Co | Medical Properties vs. Samsung Electronics Co | Medical Properties vs. Hyundai Motor | Medical Properties vs. Toyota Motor Corp |
| Reckitt Benckiser vs. SupplyMe Capital PLC | Reckitt Benckiser vs. SM Energy Co | Reckitt Benckiser vs. FuelCell Energy | Reckitt Benckiser vs. Grand Vision Media |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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