Correlation Between Elme Communities and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Elme Communities and LTC 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 Elme Communities and LTC Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elme Communities and LTC Properties, you can compare the effects of market volatilities on Elme Communities and LTC 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 Elme Communities with a short position of LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elme Communities and LTC Properties.
Diversification Opportunities for Elme Communities and LTC Properties
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elme and LTC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Elme Communities and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties and Elme Communities 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 Elme Communities are associated (or correlated) with LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Elme Communities i.e., Elme Communities and LTC Properties go up and down completely randomly.
Pair Corralation between Elme Communities and LTC Properties
Given the investment horizon of 90 days Elme Communities is expected to under-perform the LTC Properties. In addition to that, Elme Communities is 1.17 times more volatile than LTC Properties. It trades about -0.01 of its total potential returns per unit of risk. LTC Properties is currently generating about 0.04 per unit of volatility. If you would invest 3,462 in LTC Properties on October 20, 2024 and sell it today you would earn a total of 31.00 from holding LTC Properties or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elme Communities vs. LTC Properties
Performance |
| Timeline |
| Elme Communities |
| LTC Properties |
Elme Communities and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elme Communities and LTC Properties
The main advantage of trading using opposite Elme Communities and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elme Communities position performs unexpectedly, LTC 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 LTC Properties will offset losses from the drop in LTC Properties' long position.| Elme Communities vs. BRT Realty Trust | Elme Communities vs. Nexpoint Residential Trust | Elme Communities vs. Centerspace | Elme Communities vs. Veris Residential |
| LTC Properties vs. Medical Properties Trust | LTC Properties vs. Sabra Healthcare REIT | LTC Properties vs. Healthpeak Properties | LTC Properties vs. National Health Investors |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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