Correlation Between Medical Properties and Welltower
Can any of the company-specific risk be diversified away by investing in both Medical Properties and Welltower 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 Welltower 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 Welltower, you can compare the effects of market volatilities on Medical Properties and Welltower 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 Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Welltower.
Diversification Opportunities for Medical Properties and Welltower
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medical and Welltower is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Medical Properties i.e., Medical Properties and Welltower go up and down completely randomly.
Pair Corralation between Medical Properties and Welltower
Assuming the 90 days horizon Medical Properties is expected to generate 1.92 times less return on investment than Welltower. In addition to that, Medical Properties is 3.57 times more volatile than Welltower. It trades about 0.04 of its total potential returns per unit of risk. Welltower is currently generating about 0.25 per unit of volatility. If you would invest 10,803 in Welltower on August 29, 2024 and sell it today you would earn a total of 2,412 from holding Welltower or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Properties Trust vs. Welltower
Performance |
| Timeline |
| Medical Properties Trust |
| Welltower |
Medical Properties and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Welltower
The main advantage of trading using opposite Medical Properties and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower's long position.| Medical Properties vs. DXC Technology Co | Medical Properties vs. Monster Beverage Corp | Medical Properties vs. NISSIN FOODS HLDGS | Medical Properties vs. Sunny Optical Technology |
| Welltower vs. Retail Estates NV | Welltower vs. COSTCO WHOLESALE CDR | Welltower vs. Ross Stores | Welltower vs. SALESFORCE INC CDR |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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