Correlation Between Medical Properties and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Medical Properties and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on Medical Properties and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Spirent Communications.
Diversification Opportunities for Medical Properties and Spirent Communications
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medical and Spirent is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Medical Properties i.e., Medical Properties and Spirent Communications go up and down completely randomly.
Pair Corralation between Medical Properties and Spirent Communications
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 3.07 times more return on investment than Spirent Communications. However, Medical Properties is 3.07 times more volatile than Spirent Communications plc. It trades about 0.08 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.15 per unit of risk. If you would invest 431.00 in Medical Properties Trust on October 30, 2024 and sell it today you would earn a total of 38.00 from holding Medical Properties Trust or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Medical Properties Trust vs. Spirent Communications plc
Performance |
| Timeline |
| Medical Properties Trust |
| Spirent Communications |
Medical Properties and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Spirent Communications
The main advantage of trading using opposite Medical Properties and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Medical Properties vs. Liberty Media Corp | Medical Properties vs. JD Sports Fashion | Medical Properties vs. Live Nation Entertainment | Medical Properties vs. Extra Space Storage |
| Spirent Communications vs. XLMedia PLC | Spirent Communications vs. Zoom Video Communications | Spirent Communications vs. Intermediate Capital Group | Spirent Communications vs. G5 Entertainment AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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