Correlation Between American Healthcare and Universal Health
Can any of the company-specific risk be diversified away by investing in both American Healthcare and Universal Health 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 Universal Health 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 Universal Health Realty, you can compare the effects of market volatilities on American Healthcare and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Universal Health.
Diversification Opportunities for American Healthcare and Universal Health
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Universal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Universal Health Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Realty 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Realty has no effect on the direction of American Healthcare i.e., American Healthcare and Universal Health go up and down completely randomly.
Pair Corralation between American Healthcare and Universal Health
Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 1.49 times more return on investment than Universal Health. However, American Healthcare is 1.49 times more volatile than Universal Health Realty. It trades about 0.24 of its potential returns per unit of risk. Universal Health Realty is currently generating about -0.06 per unit of risk. If you would invest 2,569 in American Healthcare REIT, on August 24, 2024 and sell it today you would earn a total of 289.00 from holding American Healthcare REIT, or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Healthcare REIT, vs. Universal Health Realty
Performance |
| Timeline |
| American Healthcare REIT, |
| Universal Health Realty |
American Healthcare and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Healthcare and Universal Health
The main advantage of trading using opposite American Healthcare and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Healthcare position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| American Healthcare vs. Healthcare Realty Trust | American Healthcare vs. Welltower | American Healthcare vs. Diversified Healthcare Trust | American Healthcare vs. Healthpeak Properties |
| Universal Health vs. Healthcare Realty Trust | Universal Health vs. Healthpeak Properties | Universal Health vs. Sabra Healthcare REIT | Universal Health vs. Community Healthcare Trust |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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