Correlation Between Global Medical and Universal Health
Can any of the company-specific risk be diversified away by investing in both Global Medical and Universal Health 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 Universal Health 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 Universal Health Realty, you can compare the effects of market volatilities on Global Medical and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Universal Health.
Diversification Opportunities for Global Medical and Universal Health
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Universal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Universal Health Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Realty has no effect on the direction of Global Medical i.e., Global Medical and Universal Health go up and down completely randomly.
Pair Corralation between Global Medical and Universal Health
Given the investment horizon of 90 days Global Medical REIT is expected to under-perform the Universal Health. But the stock apears to be less risky and, when comparing its historical volatility, Global Medical REIT is 1.04 times less risky than Universal Health. The stock trades about -0.21 of its potential returns per unit of risk. The Universal Health Realty is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,966 in Universal Health Realty on August 27, 2024 and sell it today you would earn a total of 99.00 from holding Universal Health Realty or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. Universal Health Realty
Performance |
| Timeline |
| Global Medical REIT |
| Universal Health Realty |
Global Medical and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Medical and Universal Health
The main advantage of trading using opposite Global Medical and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Global Medical vs. Healthpeak Properties | Global Medical vs. Ventas Inc | Global Medical vs. National Health Investors | Global Medical vs. Sabra Healthcare REIT |
| Universal Health vs. Healthcare Realty Trust | Universal Health vs. Healthpeak Properties | Universal Health vs. Sabra Healthcare REIT | Universal Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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