Correlation Between Healthcare Realty and Essential Properties
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Essential 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 Healthcare Realty and Essential Properties 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 Essential Properties Realty, you can compare the effects of market volatilities on Healthcare Realty and Essential 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 Healthcare Realty with a short position of Essential Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Essential Properties.
Diversification Opportunities for Healthcare Realty and Essential Properties
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Healthcare and Essential is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Properties 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 Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Essential Properties go up and down completely randomly.
Pair Corralation between Healthcare Realty and Essential Properties
Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 4.57 times less return on investment than Essential Properties. In addition to that, Healthcare Realty is 1.27 times more volatile than Essential Properties Realty. It trades about 0.01 of its total potential returns per unit of risk. Essential Properties Realty is currently generating about 0.08 per unit of volatility. If you would invest 2,448 in Essential Properties Realty on November 9, 2024 and sell it today you would earn a total of 725.00 from holding Essential Properties Realty or generate 29.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Healthcare Realty Trust vs. Essential Properties Realty
Performance |
| Timeline |
| Healthcare Realty Trust |
| Essential Properties |
Healthcare Realty and Essential Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and Essential Properties
The main advantage of trading using opposite Healthcare Realty and Essential Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, Essential 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 Essential Properties will offset losses from the drop in Essential Properties' 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 |
| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net Lease |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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