Correlation Between Healthcare Realty and UDR
Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and UDR 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 UDR 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 UDR Inc, you can compare the effects of market volatilities on Healthcare Realty and UDR 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 UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and UDR.
Diversification Opportunities for Healthcare Realty and UDR
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Healthcare and UDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc 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 UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and UDR go up and down completely randomly.
Pair Corralation between Healthcare Realty and UDR
Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 1.06 times less return on investment than UDR. In addition to that, Healthcare Realty is 1.67 times more volatile than UDR Inc. It trades about 0.26 of its total potential returns per unit of risk. UDR Inc is currently generating about 0.47 per unit of volatility. If you would invest 4,130 in UDR Inc on September 2, 2024 and sell it today you would earn a total of 456.00 from holding UDR Inc or generate 11.04% 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. UDR Inc
Performance |
| Timeline |
| Healthcare Realty Trust |
| UDR Inc |
Healthcare Realty and UDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Realty and UDR
The main advantage of trading using opposite Healthcare Realty and UDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, UDR 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 UDR will offset losses from the drop in UDR'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 |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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