Correlation Between Global Medical and Agree Realty
Can any of the company-specific risk be diversified away by investing in both Global Medical and Agree Realty 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 Medical and Agree Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Medical REIT and Agree Realty, you can compare the effects of market volatilities on Global Medical and Agree Realty 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 Medical with a short position of Agree Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Agree Realty.
Diversification Opportunities for Global Medical and Agree Realty
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Agree is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty and Global Medical 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 Medical REIT are associated (or correlated) with Agree Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agree Realty has no effect on the direction of Global Medical i.e., Global Medical and Agree Realty go up and down completely randomly.
Pair Corralation between Global Medical and Agree Realty
Assuming the 90 days trading horizon Global Medical is expected to generate 1.48 times less return on investment than Agree Realty. But when comparing it to its historical volatility, Global Medical REIT is 1.65 times less risky than Agree Realty. It trades about 0.05 of its potential returns per unit of risk. Agree Realty is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,545 in Agree Realty on August 26, 2024 and sell it today you would earn a total of 364.00 from holding Agree Realty or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. Agree Realty
Performance |
| Timeline |
| Global Medical REIT |
| Agree Realty |
Global Medical and Agree Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Medical and Agree Realty
The main advantage of trading using opposite Global Medical and Agree Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical position performs unexpectedly, Agree Realty 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 Agree Realty will offset losses from the drop in Agree Realty's long position.| Global Medical vs. Global Medical REIT | Global Medical vs. Community Healthcare Trust | Global Medical vs. National Health Investors | Global Medical vs. Healthcare Realty Trust |
| Agree Realty vs. Vornado Realty Trust | Agree Realty vs. Rexford Industrial Realty | Agree Realty vs. Global Medical REIT | Agree Realty vs. Aquagold International |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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