Correlation Between Healthcare Realty and Align Technology
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Align Technology 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 Healthcare Realty and Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Healthcare Realty Trust and Align Technology, you can compare the effects of market volatilities on Healthcare Realty and Align Technology 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 Healthcare Realty with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Align Technology.
Diversification Opportunities for Healthcare Realty and Align Technology
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Healthcare and Align is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and Healthcare Realty 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 Healthcare Realty Trust are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Align Technology go up and down completely randomly.
Pair Corralation between Healthcare Realty and Align Technology
Assuming the 90 days trading horizon Healthcare Realty Trust is expected to generate 0.69 times more return on investment than Align Technology. However, Healthcare Realty Trust is 1.45 times less risky than Align Technology. It trades about -0.28 of its potential returns per unit of risk. Align Technology is currently generating about -0.23 per unit of risk. If you would invest 2,718 in Healthcare Realty Trust on October 12, 2024 and sell it today you would lose (194.00) from holding Healthcare Realty Trust or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Healthcare Realty Trust vs. Align Technology
Performance |
| Timeline |
| Healthcare Realty Trust |
| Align Technology |
Healthcare Realty and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and Align Technology
The main advantage of trading using opposite Healthcare Realty and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Healthcare Realty vs. Unifique Telecomunicaes SA | Healthcare Realty vs. Liberty Broadband | Healthcare Realty vs. Guidewire Software, | Healthcare Realty vs. Charter Communications |
| Align Technology vs. Melco Resorts Entertainment | Align Technology vs. United Natural Foods, | Align Technology vs. Beyond Meat | Align Technology vs. Verizon Communications |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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