Correlation Between Medical Properties and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Medical Properties and Smithson Investment 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 Smithson Investment 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 Smithson Investment Trust, you can compare the effects of market volatilities on Medical Properties and Smithson Investment 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Smithson Investment.
Diversification Opportunities for Medical Properties and Smithson Investment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medical and Smithson is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Medical Properties i.e., Medical Properties and Smithson Investment go up and down completely randomly.
Pair Corralation between Medical Properties and Smithson Investment
Assuming the 90 days trading horizon Medical Properties is expected to generate 1.01 times less return on investment than Smithson Investment. In addition to that, Medical Properties is 4.27 times more volatile than Smithson Investment Trust. It trades about 0.03 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.13 per unit of volatility. If you would invest 136,000 in Smithson Investment Trust on November 3, 2024 and sell it today you would earn a total of 20,000 from holding Smithson Investment Trust or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Medical Properties Trust vs. Smithson Investment Trust
Performance |
| Timeline |
| Medical Properties Trust |
| Smithson Investment Trust |
Medical Properties and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Smithson Investment
The main advantage of trading using opposite Medical Properties and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Smithson Investment 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Medical Properties vs. Mobile Tornado Group | Medical Properties vs. Charter Communications Cl | Medical Properties vs. International Biotechnology Trust | Medical Properties vs. Gaming Realms plc |
| Smithson Investment vs. Adriatic Metals | Smithson Investment vs. European Metals Holdings | Smithson Investment vs. Central Asia Metals | Smithson Investment vs. Spotify Technology SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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