Correlation Between Diversified Healthcare and Office Properties
Can any of the company-specific risk be diversified away by investing in both Diversified Healthcare and Office Properties 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 Office Properties 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 Office Properties Income, you can compare the effects of market volatilities on Diversified Healthcare and Office Properties 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Healthcare and Office Properties.
Diversification Opportunities for Diversified Healthcare and Office Properties
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Diversified and Office is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Healthcare Trust and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of Diversified Healthcare i.e., Diversified Healthcare and Office Properties go up and down completely randomly.
Pair Corralation between Diversified Healthcare and Office Properties
Assuming the 90 days horizon Diversified Healthcare Trust is expected to under-perform the Office Properties. But the stock apears to be less risky and, when comparing its historical volatility, Diversified Healthcare Trust is 2.91 times less risky than Office Properties. The stock trades about -0.14 of its potential returns per unit of risk. The Office Properties Income is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,206 in Office Properties Income on October 21, 2024 and sell it today you would lose (3.00) from holding Office Properties Income or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Healthcare Trust vs. Office Properties Income
Performance |
| Timeline |
| Diversified Healthcare |
| Office Properties Income |
Diversified Healthcare and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Healthcare and Office Properties
The main advantage of trading using opposite Diversified Healthcare and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Healthcare position performs unexpectedly, Office Properties 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 Office Properties will offset losses from the drop in Office Properties' long position.| Diversified Healthcare vs. DHCNI | Diversified Healthcare vs. Office Properties Income | Diversified Healthcare vs. QVCC | Diversified Healthcare vs. Brighthouse Financial |
| Office Properties vs. United States Cellular | Office Properties vs. United States Cellular | Office Properties vs. DBA Sempra 5750 | Office Properties vs. Hancock Whitney |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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