Correlation Between Healthcare Realty and American Homes
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and American Homes 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 American Homes 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 American Homes 4, you can compare the effects of market volatilities on Healthcare Realty and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and American Homes.
Diversification Opportunities for Healthcare Realty and American Homes
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Healthcare and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and American Homes go up and down completely randomly.
Pair Corralation between Healthcare Realty and American Homes
Allowing for the 90-day total investment horizon Healthcare Realty Trust is expected to generate 1.2 times more return on investment than American Homes. However, Healthcare Realty is 1.2 times more volatile than American Homes 4. It trades about 0.1 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.06 per unit of risk. If you would invest 1,566 in Healthcare Realty Trust on August 30, 2024 and sell it today you would earn a total of 282.00 from holding Healthcare Realty Trust or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Healthcare Realty Trust vs. American Homes 4
Performance |
| Timeline |
| Healthcare Realty Trust |
| American Homes 4 |
Healthcare Realty and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and American Homes
The main advantage of trading using opposite Healthcare Realty and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Healthcare Realty vs. Healthpeak Properties | Healthcare Realty vs. Sabra Healthcare REIT | Healthcare Realty vs. Community Healthcare Trust | Healthcare Realty vs. Universal Health Realty |
| American Homes vs. Clipper Realty | American Homes vs. UDR Inc | American Homes vs. UMH Properties | American Homes vs. Apartment Investment and |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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