Correlation Between Global Healthcare and Smart REIT
Can any of the company-specific risk be diversified away by investing in both Global Healthcare and Smart REIT 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 Global Healthcare and Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Healthcare REIT and Smart REIT, you can compare the effects of market volatilities on Global Healthcare and Smart REIT 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 Global Healthcare with a short position of Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Healthcare and Smart REIT.
Diversification Opportunities for Global Healthcare and Smart REIT
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Smart is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Global Healthcare REIT and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT and Global 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 Global Healthcare REIT are associated (or correlated) with Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Global Healthcare i.e., Global Healthcare and Smart REIT go up and down completely randomly.
Pair Corralation between Global Healthcare and Smart REIT
Given the investment horizon of 90 days Global Healthcare REIT is expected to generate 6.84 times more return on investment than Smart REIT. However, Global Healthcare is 6.84 times more volatile than Smart REIT. It trades about 0.01 of its potential returns per unit of risk. Smart REIT is currently generating about -0.07 per unit of risk. If you would invest 178.00 in Global Healthcare REIT on August 29, 2024 and sell it today you would lose (8.00) from holding Global Healthcare REIT or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Healthcare REIT vs. Smart REIT
Performance |
| Timeline |
| Global Healthcare REIT |
| Smart REIT |
Global Healthcare and Smart REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Healthcare and Smart REIT
The main advantage of trading using opposite Global Healthcare and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Healthcare position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.| Global Healthcare vs. Smart REIT | Global Healthcare vs. Phillips Edison Co | Global Healthcare vs. Simon Property Group | Global Healthcare vs. Inventrust Properties Corp |
| Smart REIT vs. Firm Capital Property | Smart REIT vs. CT Real Estate | Smart REIT vs. Slate Grocery REIT | Smart REIT vs. Phillips Edison Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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