Correlation Between American Healthcare and Apple Hospitality
Can any of the company-specific risk be diversified away by investing in both American Healthcare and Apple Hospitality 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 American Healthcare and Apple Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Healthcare REIT, and Apple Hospitality REIT, you can compare the effects of market volatilities on American Healthcare and Apple Hospitality 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 American Healthcare with a short position of Apple Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Apple Hospitality.
Diversification Opportunities for American Healthcare and Apple Hospitality
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Apple is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Apple Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Hospitality REIT and American Healthcare 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 American Healthcare REIT, are associated (or correlated) with Apple Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Hospitality REIT has no effect on the direction of American Healthcare i.e., American Healthcare and Apple Hospitality go up and down completely randomly.
Pair Corralation between American Healthcare and Apple Hospitality
Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 1.27 times more return on investment than Apple Hospitality. However, American Healthcare is 1.27 times more volatile than Apple Hospitality REIT. It trades about 0.36 of its potential returns per unit of risk. Apple Hospitality REIT is currently generating about 0.08 per unit of risk. If you would invest 1,633 in American Healthcare REIT, on August 27, 2024 and sell it today you would earn a total of 1,225 from holding American Healthcare REIT, or generate 75.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Healthcare REIT, vs. Apple Hospitality REIT
Performance |
| Timeline |
| American Healthcare REIT, |
| Apple Hospitality REIT |
American Healthcare and Apple Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Healthcare and Apple Hospitality
The main advantage of trading using opposite American Healthcare and Apple Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Healthcare position performs unexpectedly, Apple Hospitality 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 Apple Hospitality will offset losses from the drop in Apple Hospitality's long position.| American Healthcare vs. Marfrig Global Foods | American Healthcare vs. Custom Truck One | American Healthcare vs. Lendlease Global Commercial | American Healthcare vs. Fortress Transp Infra |
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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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