Correlation Between Healthcare Realty and Office Properties
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Office 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 Office 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 Office Properties Income, you can compare the effects of market volatilities on Healthcare Realty and Office 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Office Properties.
Diversification Opportunities for Healthcare Realty and Office Properties
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Healthcare and Office is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Office Properties go up and down completely randomly.
Pair Corralation between Healthcare Realty and Office Properties
Allowing for the 90-day total investment horizon Healthcare Realty Trust is expected to generate 0.38 times more return on investment than Office Properties. However, Healthcare Realty Trust is 2.6 times less risky than Office Properties. It trades about 0.16 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.06 per unit of risk. If you would invest 1,732 in Healthcare Realty Trust on August 31, 2024 and sell it today you would earn a total of 116.00 from holding Healthcare Realty Trust or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Healthcare Realty Trust vs. Office Properties Income
Performance |
| Timeline |
| Healthcare Realty Trust |
| Office Properties Income |
Healthcare Realty and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and Office Properties
The main advantage of trading using opposite Healthcare Realty and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, Office 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 Office Properties will offset losses from the drop in Office Properties' long position.| Healthcare Realty vs. LTC Properties | Healthcare Realty vs. Omega Healthcare Investors | Healthcare Realty vs. Ventas Inc | Healthcare Realty vs. Community Healthcare Trust |
| Office Properties vs. United States Cellular | Office Properties vs. United States Cellular | Office Properties vs. DBA Sempra 5750 | Office Properties vs. Hancock Whitney |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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