Correlation Between Global Medical and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Global Medical 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 Global Medical and LTC Properties 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 LTC Properties, you can compare the effects of market volatilities on Global Medical 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 Global Medical with a short position of LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and LTC Properties.
Diversification Opportunities for Global Medical and LTC Properties
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and LTC is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties 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 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 Global Medical i.e., Global Medical and LTC Properties go up and down completely randomly.
Pair Corralation between Global Medical and LTC Properties
Given the investment horizon of 90 days Global Medical REIT is expected to under-perform the LTC Properties. But the stock apears to be less risky and, when comparing its historical volatility, Global Medical REIT is 1.4 times less risky than LTC Properties. The stock trades about -0.25 of its potential returns per unit of risk. The LTC Properties is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,576 in LTC Properties on August 24, 2024 and sell it today you would earn a total of 294.00 from holding LTC Properties or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. LTC Properties
Performance |
| Timeline |
| Global Medical REIT |
| LTC Properties |
Global Medical and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Medical and LTC Properties
The main advantage of trading using opposite Global Medical and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical 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.| Global Medical vs. Healthpeak Properties | Global Medical vs. Ventas Inc | Global Medical vs. National Health Investors | Global Medical vs. Sabra Healthcare REIT |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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