Correlation Between Amazon and Healthcare Realty
Can any of the company-specific risk be diversified away by investing in both Amazon and Healthcare Realty 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 Amazon and Healthcare Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Healthcare Realty Trust, you can compare the effects of market volatilities on Amazon and Healthcare Realty 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 Amazon with a short position of Healthcare Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Healthcare Realty.
Diversification Opportunities for Amazon and Healthcare Realty
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Healthcare is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Healthcare Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Realty Trust and Amazon 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 Amazon Inc are associated (or correlated) with Healthcare Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Realty Trust has no effect on the direction of Amazon i.e., Amazon and Healthcare Realty go up and down completely randomly.
Pair Corralation between Amazon and Healthcare Realty
Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.72 times more return on investment than Healthcare Realty. However, Amazon Inc is 1.39 times less risky than Healthcare Realty. It trades about 0.05 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about -0.46 per unit of risk. If you would invest 6,885 in Amazon Inc on November 4, 2024 and sell it today you would earn a total of 73.00 from holding Amazon Inc or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.82% |
| Values | Daily Returns |
Amazon Inc vs. Healthcare Realty Trust
Performance |
| Timeline |
| Amazon Inc |
| Healthcare Realty Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Healthcare Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Healthcare Realty
The main advantage of trading using opposite Amazon and Healthcare Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Healthcare Realty 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 Healthcare Realty will offset losses from the drop in Healthcare Realty's long position.| Amazon vs. Prudential Financial | Amazon vs. Bread Financial Holdings | Amazon vs. Brpr Corporate Offices | Amazon vs. Academy Sports and |
| Healthcare Realty vs. Ares Management | Healthcare Realty vs. Burlington Stores, | Healthcare Realty vs. Costco Wholesale | Healthcare Realty vs. Academy Sports and |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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