Correlation Between CareTrust REIT and Global Medical
Can any of the company-specific risk be diversified away by investing in both CareTrust REIT and Global Medical 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 Global Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareTrust REIT and Global Medical REIT, you can compare the effects of market volatilities on CareTrust REIT and Global Medical 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 Global Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareTrust REIT and Global Medical.
Diversification Opportunities for CareTrust REIT and Global Medical
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between CareTrust and Global is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT and Global Medical REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Medical REIT 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 Global Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Medical REIT has no effect on the direction of CareTrust REIT i.e., CareTrust REIT and Global Medical go up and down completely randomly.
Pair Corralation between CareTrust REIT and Global Medical
Given the investment horizon of 90 days CareTrust REIT is expected to generate 0.75 times more return on investment than Global Medical. However, CareTrust REIT is 1.34 times less risky than Global Medical. It trades about 0.12 of its potential returns per unit of risk. Global Medical REIT is currently generating about 0.03 per unit of risk. If you would invest 1,810 in CareTrust REIT on August 27, 2024 and sell it today you would earn a total of 1,220 from holding CareTrust REIT or generate 67.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CareTrust REIT vs. Global Medical REIT
Performance |
| Timeline |
| CareTrust REIT |
| Global Medical REIT |
CareTrust REIT and Global Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CareTrust REIT and Global Medical
The main advantage of trading using opposite CareTrust REIT and Global Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareTrust REIT position performs unexpectedly, Global Medical 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 Global Medical will offset losses from the drop in Global Medical'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 |
| Global Medical vs. Healthpeak Properties | Global Medical vs. Ventas Inc | Global Medical vs. National Health Investors | Global Medical vs. Sabra Healthcare REIT |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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