Correlation Between Medical Properties and Universal Health
Can any of the company-specific risk be diversified away by investing in both Medical Properties and Universal Health 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 Universal Health 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 Universal Health Realty, you can compare the effects of market volatilities on Medical Properties and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Universal Health.
Diversification Opportunities for Medical Properties and Universal Health
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medical and Universal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Universal Health Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Realty 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Realty has no effect on the direction of Medical Properties i.e., Medical Properties and Universal Health go up and down completely randomly.
Pair Corralation between Medical Properties and Universal Health
Assuming the 90 days horizon Medical Properties Trust is expected to under-perform the Universal Health. In addition to that, Medical Properties is 2.53 times more volatile than Universal Health Realty. It trades about -0.02 of its total potential returns per unit of risk. Universal Health Realty is currently generating about 0.0 per unit of volatility. If you would invest 4,338 in Universal Health Realty on August 25, 2024 and sell it today you would lose (460.00) from holding Universal Health Realty or give up 10.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Properties Trust vs. Universal Health Realty
Performance |
| Timeline |
| Medical Properties Trust |
| Universal Health Realty |
Medical Properties and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Universal Health
The main advantage of trading using opposite Medical Properties and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health's long position.| Medical Properties vs. Welltower | Medical Properties vs. Sabra Health Care | Medical Properties vs. National Health Investors | Medical Properties vs. The GEO Group |
| Universal Health vs. Welltower | Universal Health vs. Medical Properties Trust | Universal Health vs. Sabra Health Care | Universal Health 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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