Correlation Between Dow Jones and Healthpeak Properties
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Healthpeak 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 Dow Jones and Healthpeak Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Healthpeak Properties, you can compare the effects of market volatilities on Dow Jones and Healthpeak 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 Dow Jones with a short position of Healthpeak Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Healthpeak Properties.
Diversification Opportunities for Dow Jones and Healthpeak Properties
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dow and Healthpeak is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of Dow Jones i.e., Dow Jones and Healthpeak Properties go up and down completely randomly.
Pair Corralation between Dow Jones and Healthpeak Properties
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.65 times more return on investment than Healthpeak Properties. However, Dow Jones Industrial is 1.54 times less risky than Healthpeak Properties. It trades about 0.29 of its potential returns per unit of risk. Healthpeak Properties is currently generating about -0.02 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Healthpeak Properties
Performance |
| Timeline |
Dow Jones and Healthpeak Properties Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Healthpeak Properties
Pair trading matchups for Healthpeak Properties
Pair Trading with Dow Jones and Healthpeak Properties
The main advantage of trading using opposite Dow Jones and Healthpeak Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Healthpeak 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 Healthpeak Properties will offset losses from the drop in Healthpeak Properties' long position.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Healthpeak Properties vs. LTC Properties | Healthpeak Properties vs. Omega Healthcare Investors | Healthpeak Properties vs. Ventas Inc | Healthpeak Properties vs. Community Healthcare Trust |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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