Correlation Between Community Healthcare and Universal Health
Can any of the company-specific risk be diversified away by investing in both Community 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 Community 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 Community Healthcare Trust and Universal Health Realty, you can compare the effects of market volatilities on Community 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 Community Healthcare with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Healthcare and Universal Health.
Diversification Opportunities for Community Healthcare and Universal Health
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Community and Universal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Community Healthcare Trust 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 Community 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 Community Healthcare Trust 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 Community Healthcare i.e., Community Healthcare and Universal Health go up and down completely randomly.
Pair Corralation between Community Healthcare and Universal Health
Given the investment horizon of 90 days Community Healthcare Trust is expected to generate 1.48 times more return on investment than Universal Health. However, Community Healthcare is 1.48 times more volatile than Universal Health Realty. It trades about 0.19 of its potential returns per unit of risk. Universal Health Realty is currently generating about 0.12 per unit of risk. If you would invest 1,730 in Community Healthcare Trust on August 27, 2024 and sell it today you would earn a total of 130.00 from holding Community Healthcare Trust or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Healthcare Trust vs. Universal Health Realty
Performance |
| Timeline |
| Community Healthcare |
| Universal Health Realty |
Community Healthcare and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Healthcare and Universal Health
The main advantage of trading using opposite Community Healthcare and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community 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.| Community Healthcare vs. Global Medical REIT | Community Healthcare vs. National Health Investors | Community Healthcare vs. Healthpeak Properties | Community Healthcare vs. Sabra Healthcare REIT |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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