Correlation Between CareTrust REIT and Diversified Healthcare
Can any of the company-specific risk be diversified away by investing in both CareTrust REIT and Diversified Healthcare 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 CareTrust REIT and Diversified Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareTrust REIT and Diversified Healthcare Trust, you can compare the effects of market volatilities on CareTrust REIT and Diversified Healthcare 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 CareTrust REIT with a short position of Diversified Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareTrust REIT and Diversified Healthcare.
Diversification Opportunities for CareTrust REIT and Diversified Healthcare
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CareTrust and Diversified is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT and Diversified Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Healthcare and CareTrust REIT 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 CareTrust REIT are associated (or correlated) with Diversified Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Healthcare has no effect on the direction of CareTrust REIT i.e., CareTrust REIT and Diversified Healthcare go up and down completely randomly.
Pair Corralation between CareTrust REIT and Diversified Healthcare
Given the investment horizon of 90 days CareTrust REIT is expected to generate 0.32 times more return on investment than Diversified Healthcare. However, CareTrust REIT is 3.14 times less risky than Diversified Healthcare. It trades about -0.12 of its potential returns per unit of risk. Diversified Healthcare Trust is currently generating about -0.26 per unit of risk. If you would invest 3,106 in CareTrust REIT on September 3, 2024 and sell it today you would lose (127.00) from holding CareTrust REIT or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CareTrust REIT vs. Diversified Healthcare Trust
Performance |
| Timeline |
| CareTrust REIT |
| Diversified Healthcare |
CareTrust REIT and Diversified Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CareTrust REIT and Diversified Healthcare
The main advantage of trading using opposite CareTrust REIT and Diversified Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareTrust REIT position performs unexpectedly, Diversified Healthcare 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 Diversified Healthcare will offset losses from the drop in Diversified Healthcare's long position.| CareTrust REIT vs. Global Medical REIT | CareTrust REIT vs. Universal Health Realty | CareTrust REIT vs. Healthpeak Properties | CareTrust REIT vs. Healthcare Realty Trust |
| Diversified Healthcare vs. Community Healthcare Trust | Diversified Healthcare vs. Global Medical REIT | Diversified Healthcare vs. CareTrust REIT | Diversified Healthcare vs. Welltower |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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