Correlation Between Healthcare Realty and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on Healthcare Realty and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Sterling Capital.
Diversification Opportunities for Healthcare Realty and Sterling Capital
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Healthcare and Sterling is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Sterling Capital go up and down completely randomly.
Pair Corralation between Healthcare Realty and Sterling Capital
Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 1.24 times less return on investment than Sterling Capital. In addition to that, Healthcare Realty is 1.53 times more volatile than Sterling Capital Stratton. It trades about 0.02 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.03 per unit of volatility. If you would invest 3,473 in Sterling Capital Stratton on September 3, 2024 and sell it today you would earn a total of 564.00 from holding Sterling Capital Stratton or generate 16.24% 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. Sterling Capital Stratton
Performance |
| Timeline |
| Healthcare Realty Trust |
| Sterling Capital Stratton |
Healthcare Realty and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and Sterling Capital
The main advantage of trading using opposite Healthcare Realty and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Healthcare Realty vs. Community Healthcare Trust | Healthcare Realty vs. Global Medical REIT | Healthcare Realty vs. CareTrust REIT | Healthcare Realty vs. Welltower |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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