Correlation Between Medical Properties and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Medical Properties and LTC 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 Medical Properties and LTC Properties 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 LTC Properties, you can compare the effects of market volatilities on Medical Properties and LTC 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 Medical Properties with a short position of LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and LTC Properties.
Diversification Opportunities for Medical Properties and LTC Properties
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medical and LTC is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties 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 LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Medical Properties i.e., Medical Properties and LTC Properties go up and down completely randomly.
Pair Corralation between Medical Properties and LTC Properties
Assuming the 90 days horizon Medical Properties Trust is expected to under-perform the LTC Properties. In addition to that, Medical Properties is 2.72 times more volatile than LTC Properties. It trades about -0.15 of its total potential returns per unit of risk. LTC Properties is currently generating about 0.19 per unit of volatility. If you would invest 3,262 in LTC Properties on August 25, 2024 and sell it today you would earn a total of 414.00 from holding LTC Properties or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.78% |
| Values | Daily Returns |
Medical Properties Trust vs. LTC Properties
Performance |
| Timeline |
| Medical Properties Trust |
| LTC Properties |
Medical Properties and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and LTC Properties
The main advantage of trading using opposite Medical Properties and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, LTC 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 LTC Properties will offset losses from the drop in LTC Properties' long position.| Medical Properties vs. Welltower | Medical Properties vs. Sabra Health Care | Medical Properties vs. National Health Investors | Medical Properties vs. The GEO Group |
| LTC Properties vs. Welltower | LTC Properties vs. Medical Properties Trust | LTC Properties vs. Sabra Health Care | LTC Properties vs. National Health Investors |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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