Correlation Between Imperial Brands and Medical Properties
Can any of the company-specific risk be diversified away by investing in both Imperial Brands and Medical 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 Imperial Brands and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Brands PLC and Medical Properties Trust, you can compare the effects of market volatilities on Imperial Brands and Medical 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 Imperial Brands with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Brands and Medical Properties.
Diversification Opportunities for Imperial Brands and Medical Properties
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Imperial and Medical is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Brands PLC and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and Imperial Brands 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 Imperial Brands PLC are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Imperial Brands i.e., Imperial Brands and Medical Properties go up and down completely randomly.
Pair Corralation between Imperial Brands and Medical Properties
Assuming the 90 days horizon Imperial Brands is expected to generate 4.54 times less return on investment than Medical Properties. But when comparing it to its historical volatility, Imperial Brands PLC is 3.7 times less risky than Medical Properties. It trades about 0.21 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 388.00 in Medical Properties Trust on November 5, 2024 and sell it today you would earn a total of 62.00 from holding Medical Properties Trust or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Brands PLC vs. Medical Properties Trust
Performance |
| Timeline |
| Imperial Brands PLC |
| Medical Properties Trust |
Imperial Brands and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Brands and Medical Properties
The main advantage of trading using opposite Imperial Brands and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Brands position performs unexpectedly, Medical 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| Imperial Brands vs. Wayside Technology Group | Imperial Brands vs. MGIC INVESTMENT | Imperial Brands vs. Gladstone Investment | Imperial Brands vs. Take Two Interactive Software |
| Medical Properties vs. Canadian Utilities Limited | Medical Properties vs. G III Apparel Group | Medical Properties vs. Japan Medical Dynamic | Medical Properties vs. IMAGIN MEDICAL INC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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