Correlation Between Diversified Healthcare and Community Healthcare
Can any of the company-specific risk be diversified away by investing in both Diversified Healthcare and Community 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 Diversified Healthcare and Community Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Healthcare Trust and Community Healthcare Trust, you can compare the effects of market volatilities on Diversified Healthcare and Community 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 Diversified Healthcare with a short position of Community Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Healthcare and Community Healthcare.
Diversification Opportunities for Diversified Healthcare and Community Healthcare
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diversified and Community is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Healthcare Trust and Community Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Healthcare and Diversified 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 Diversified Healthcare Trust are associated (or correlated) with Community Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Healthcare has no effect on the direction of Diversified Healthcare i.e., Diversified Healthcare and Community Healthcare go up and down completely randomly.
Pair Corralation between Diversified Healthcare and Community Healthcare
Considering the 90-day investment horizon Diversified Healthcare Trust is expected to generate 1.3 times more return on investment than Community Healthcare. However, Diversified Healthcare is 1.3 times more volatile than Community Healthcare Trust. It trades about -0.01 of its potential returns per unit of risk. Community Healthcare Trust is currently generating about -0.03 per unit of risk. If you would invest 296.00 in Diversified Healthcare Trust on September 3, 2024 and sell it today you would lose (36.00) from holding Diversified Healthcare Trust or give up 12.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Healthcare Trust vs. Community Healthcare Trust
Performance |
| Timeline |
| Diversified Healthcare |
| Community Healthcare |
Diversified Healthcare and Community Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Healthcare and Community Healthcare
The main advantage of trading using opposite Diversified Healthcare and Community Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Healthcare position performs unexpectedly, Community 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 Community Healthcare will offset losses from the drop in Community Healthcare's long position.| Diversified Healthcare vs. Community Healthcare Trust | Diversified Healthcare vs. Universal Health Realty | Diversified Healthcare vs. Global Medical REIT | Diversified Healthcare vs. CareTrust REIT |
| Community Healthcare vs. Global Medical REIT | Community Healthcare vs. National Health Investors | Community Healthcare vs. Healthpeak Properties | Community Healthcare 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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