Correlation Between Diversified Healthcare and Global Medical
Can any of the company-specific risk be diversified away by investing in both Diversified Healthcare 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 Diversified Healthcare and Global Medical 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 Global Medical REIT, you can compare the effects of market volatilities on Diversified Healthcare 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 Diversified Healthcare with a short position of Global Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Healthcare and Global Medical.
Diversification Opportunities for Diversified Healthcare and Global Medical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diversified and Global is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Healthcare Trust 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 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 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 Diversified Healthcare i.e., Diversified Healthcare and Global Medical go up and down completely randomly.
Pair Corralation between Diversified Healthcare and Global Medical
Considering the 90-day investment horizon Diversified Healthcare Trust is expected to generate 2.37 times more return on investment than Global Medical. However, Diversified Healthcare is 2.37 times more volatile than Global Medical REIT. It trades about 0.09 of its potential returns per unit of risk. Global Medical REIT is currently generating about 0.05 per unit of risk. If you would invest 229.00 in Diversified Healthcare Trust on November 1, 2024 and sell it today you would earn a total of 13.00 from holding Diversified Healthcare Trust or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Diversified Healthcare Trust vs. Global Medical REIT
Performance |
| Timeline |
| Diversified Healthcare |
| Global Medical REIT |
Diversified Healthcare and Global Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Healthcare and Global Medical
The main advantage of trading using opposite Diversified Healthcare and Global Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Healthcare 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.| Diversified Healthcare vs. Global Medical REIT | Diversified Healthcare vs. Healthpeak Properties | Diversified Healthcare vs. Ventas Inc | Diversified Healthcare vs. National Health Investors |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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