Correlation Between Medical Properties and OReilly Automotive
Can any of the company-specific risk be diversified away by investing in both Medical Properties and OReilly Automotive 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 Medical Properties and OReilly Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust, and OReilly Automotive, you can compare the effects of market volatilities on Medical Properties and OReilly Automotive 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 Medical Properties with a short position of OReilly Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and OReilly Automotive.
Diversification Opportunities for Medical Properties and OReilly Automotive
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Medical and OReilly is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust, and OReilly Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OReilly Automotive and Medical Properties 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 Medical Properties Trust, are associated (or correlated) with OReilly Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OReilly Automotive has no effect on the direction of Medical Properties i.e., Medical Properties and OReilly Automotive go up and down completely randomly.
Pair Corralation between Medical Properties and OReilly Automotive
Assuming the 90 days trading horizon Medical Properties Trust, is expected to generate 1.5 times more return on investment than OReilly Automotive. However, Medical Properties is 1.5 times more volatile than OReilly Automotive. It trades about 0.17 of its potential returns per unit of risk. OReilly Automotive is currently generating about 0.09 per unit of risk. If you would invest 1,226 in Medical Properties Trust, on November 6, 2024 and sell it today you would earn a total of 140.00 from holding Medical Properties Trust, or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Medical Properties Trust, vs. OReilly Automotive
Performance |
| Timeline |
| Medical Properties Trust, |
| OReilly Automotive |
Medical Properties and OReilly Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and OReilly Automotive
The main advantage of trading using opposite Medical Properties and OReilly Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, OReilly Automotive 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 OReilly Automotive will offset losses from the drop in OReilly Automotive's long position.| Medical Properties vs. Marfrig Global Foods | Medical Properties vs. Spotify Technology SA | Medical Properties vs. Beyond Meat | Medical Properties vs. British American Tobacco |
| OReilly Automotive vs. Beyond Meat | OReilly Automotive vs. Martin Marietta Materials, | OReilly Automotive vs. The Trade Desk | OReilly Automotive vs. Unifique Telecomunicaes SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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