Correlation Between Elis SA and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Elis SA 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 Elis SA and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elis SA and Medical Properties Trust, you can compare the effects of market volatilities on Elis SA 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 Elis SA with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Medical Properties.
Diversification Opportunities for Elis SA and Medical Properties
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elis and Medical is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA 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 Elis SA 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 Elis SA 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 Elis SA i.e., Elis SA and Medical Properties go up and down completely randomly.
Pair Corralation between Elis SA and Medical Properties
Assuming the 90 days horizon Elis SA is expected to generate 0.42 times more return on investment than Medical Properties. However, Elis SA is 2.37 times less risky than Medical Properties. It trades about -0.09 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.12 per unit of risk. If you would invest 2,028 in Elis SA on August 26, 2024 and sell it today you would lose (69.00) from holding Elis SA or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elis SA vs. Medical Properties Trust
Performance |
| Timeline |
| Elis SA |
| Medical Properties Trust |
Elis SA and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elis SA and Medical Properties
The main advantage of trading using opposite Elis SA and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis SA 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.The idea behind Elis SA and Medical Properties Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Medical Properties vs. Welltower | Medical Properties vs. Sabra Health Care | Medical Properties vs. National Health Investors | Medical Properties vs. The GEO 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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