Correlation Between Waste Management and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Waste Management and Medical Properties 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 Waste Management and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Medical Properties Trust, you can compare the effects of market volatilities on Waste Management and Medical Properties 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 Waste Management with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Medical Properties.
Diversification Opportunities for Waste Management and Medical Properties
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Waste and Medical is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and Waste Management 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 Waste Management are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Waste Management i.e., Waste Management and Medical Properties go up and down completely randomly.
Pair Corralation between Waste Management and Medical Properties
Assuming the 90 days trading horizon Waste Management is expected to generate 0.23 times more return on investment than Medical Properties. However, Waste Management is 4.34 times less risky than Medical Properties. It trades about 0.06 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.01 per unit of risk. If you would invest 15,114 in Waste Management on September 24, 2024 and sell it today you would earn a total of 5,502 from holding Waste Management or generate 36.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Waste Management vs. Medical Properties Trust
Performance |
| Timeline |
| Waste Management |
| Medical Properties Trust |
Waste Management and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Medical Properties
The main advantage of trading using opposite Waste Management and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| Waste Management vs. Uniper SE | Waste Management vs. Mulberry Group PLC | Waste Management vs. London Security Plc | Waste Management vs. Triad Group PLC |
| Medical Properties vs. Waste Management | Medical Properties vs. Anglesey Mining | Medical Properties vs. Litigation Capital Management | Medical Properties vs. Silvercorp Metals |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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