Correlation Between Diversified Healthcare and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Diversified Healthcare and Brighthouse Financial 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 Brighthouse Financial 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 Brighthouse Financial, you can compare the effects of market volatilities on Diversified Healthcare and Brighthouse Financial 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 Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Healthcare and Brighthouse Financial.
Diversification Opportunities for Diversified Healthcare and Brighthouse Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diversified and Brighthouse is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Healthcare Trust and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial 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 Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Diversified Healthcare i.e., Diversified Healthcare and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Diversified Healthcare and Brighthouse Financial
Assuming the 90 days horizon Diversified Healthcare Trust is expected to generate 1.65 times more return on investment than Brighthouse Financial. However, Diversified Healthcare is 1.65 times more volatile than Brighthouse Financial. It trades about 0.04 of its potential returns per unit of risk. Brighthouse Financial is currently generating about 0.06 per unit of risk. If you would invest 1,307 in Diversified Healthcare Trust on September 12, 2024 and sell it today you would earn a total of 295.00 from holding Diversified Healthcare Trust or generate 22.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Healthcare Trust vs. Brighthouse Financial
Performance |
| Timeline |
| Diversified Healthcare |
| Brighthouse Financial |
Diversified Healthcare and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Healthcare and Brighthouse Financial
The main advantage of trading using opposite Diversified Healthcare and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Healthcare position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| Diversified Healthcare vs. DHCNI | Diversified Healthcare vs. Office Properties Income | Diversified Healthcare vs. QVCC | Diversified Healthcare vs. Brighthouse Financial |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Unum Group | Brighthouse Financial vs. Argo Group 65 | Brighthouse Financial vs. Arch Capital Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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