Correlation Between Healthcare Realty and National Health
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and National 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 Healthcare Realty and National Health 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 National Health Investors, you can compare the effects of market volatilities on Healthcare Realty and National 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 Healthcare Realty with a short position of National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and National Health.
Diversification Opportunities for Healthcare Realty and National Health
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Healthcare and National is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and National Health go up and down completely randomly.
Pair Corralation between Healthcare Realty and National Health
Allowing for the 90-day total investment horizon Healthcare Realty Trust is expected to generate 0.92 times more return on investment than National Health. However, Healthcare Realty Trust is 1.08 times less risky than National Health. It trades about -0.02 of its potential returns per unit of risk. National Health Investors is currently generating about -0.04 per unit of risk. If you would invest 1,695 in Healthcare Realty Trust on November 1, 2024 and sell it today you would lose (13.00) from holding Healthcare Realty Trust or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Healthcare Realty Trust vs. National Health Investors
Performance |
| Timeline |
| Healthcare Realty Trust |
| National Health Investors |
Healthcare Realty and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and National Health
The main advantage of trading using opposite Healthcare Realty and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, National 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 National Health will offset losses from the drop in National Health's 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 |
| National Health vs. Global Medical REIT | National Health vs. Healthpeak Properties | National Health vs. Ventas Inc | National Health vs. Omega Healthcare Investors |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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