Correlation Between Healthcare Realty and Equity Residential
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Equity Residential 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 Equity Residential 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 Equity Residential, you can compare the effects of market volatilities on Healthcare Realty and Equity Residential 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 Equity Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Equity Residential.
Diversification Opportunities for Healthcare Realty and Equity Residential
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Healthcare and Equity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential 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 Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Equity Residential go up and down completely randomly.
Pair Corralation between Healthcare Realty and Equity Residential
Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 2.1 times less return on investment than Equity Residential. In addition to that, Healthcare Realty is 1.29 times more volatile than Equity Residential. It trades about 0.02 of its total potential returns per unit of risk. Equity Residential is currently generating about 0.05 per unit of volatility. If you would invest 5,900 in Equity Residential on September 3, 2024 and sell it today you would earn a total of 1,766 from holding Equity Residential or generate 29.93% 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. Equity Residential
Performance |
| Timeline |
| Healthcare Realty Trust |
| Equity Residential |
Healthcare Realty and Equity Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and Equity Residential
The main advantage of trading using opposite Healthcare Realty and Equity Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, Equity Residential 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 Equity Residential will offset losses from the drop in Equity Residential's long position.| Healthcare Realty vs. Community Healthcare Trust | Healthcare Realty vs. Universal Health Realty | Healthcare Realty vs. Global Medical REIT | Healthcare Realty vs. CareTrust REIT |
| Equity Residential vs. Clipper Realty | Equity Residential vs. Centerspace | Equity Residential vs. Equity Lifestyle Properties | Equity Residential vs. Independence Realty 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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