Correlation Between American Healthcare and Ventas
Can any of the company-specific risk be diversified away by investing in both American Healthcare and Ventas 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 Ventas 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 Ventas Inc, you can compare the effects of market volatilities on American Healthcare and Ventas 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 Ventas. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Ventas.
Diversification Opportunities for American Healthcare and Ventas
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Ventas is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Ventas Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc 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 Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of American Healthcare i.e., American Healthcare and Ventas go up and down completely randomly.
Pair Corralation between American Healthcare and Ventas
Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 1.96 times more return on investment than Ventas. However, American Healthcare is 1.96 times more volatile than Ventas Inc. It trades about 0.25 of its potential returns per unit of risk. Ventas Inc is currently generating about -0.1 per unit of risk. If you would invest 2,596 in American Healthcare REIT, on August 28, 2024 and sell it today you would earn a total of 300.00 from holding American Healthcare REIT, or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Healthcare REIT, vs. Ventas Inc
Performance |
| Timeline |
| American Healthcare REIT, |
| Ventas Inc |
American Healthcare and Ventas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Healthcare and Ventas
The main advantage of trading using opposite American Healthcare and Ventas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Healthcare position performs unexpectedly, Ventas 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 Ventas will offset losses from the drop in Ventas' 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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