Correlation Between Caledonia Mining and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Medical Properties 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 Caledonia Mining and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Medical Properties Trust, you can compare the effects of market volatilities on Caledonia Mining and Medical Properties 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 Caledonia Mining with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Medical Properties.
Diversification Opportunities for Caledonia Mining and Medical Properties
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Caledonia and Medical is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Medical Properties go up and down completely randomly.
Pair Corralation between Caledonia Mining and Medical Properties
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Medical Properties. But the stock apears to be less risky and, when comparing its historical volatility, Caledonia Mining is 1.01 times less risky than Medical Properties. The stock trades about -0.45 of its potential returns per unit of risk. The Medical Properties Trust is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 469.00 in Medical Properties Trust on September 1, 2024 and sell it today you would lose (35.00) from holding Medical Properties Trust or give up 7.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Medical Properties Trust
Performance |
| Timeline |
| Caledonia Mining |
| Medical Properties Trust |
Caledonia Mining and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Medical Properties
The main advantage of trading using opposite Caledonia Mining and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| Caledonia Mining vs. Alaska Air Group | Caledonia Mining vs. Medical Properties Trust | Caledonia Mining vs. Sealed Air Corp | Caledonia Mining vs. Fevertree Drinks Plc |
| Medical Properties vs. Cairo Communication SpA | Medical Properties vs. Spirent Communications plc | Medical Properties vs. Zegona Communications Plc | Medical Properties vs. Verizon Communications |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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