Correlation Between Medical Properties and US FOODS
Can any of the company-specific risk be diversified away by investing in both Medical Properties and US FOODS 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 US FOODS 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 US FOODS HOLDING, you can compare the effects of market volatilities on Medical Properties and US FOODS 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 US FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and US FOODS.
Diversification Opportunities for Medical Properties and US FOODS
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Medical and UFH is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and US FOODS HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US FOODS HOLDING 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 US FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US FOODS HOLDING has no effect on the direction of Medical Properties i.e., Medical Properties and US FOODS go up and down completely randomly.
Pair Corralation between Medical Properties and US FOODS
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 2.69 times more return on investment than US FOODS. However, Medical Properties is 2.69 times more volatile than US FOODS HOLDING. It trades about 0.18 of its potential returns per unit of risk. US FOODS HOLDING is currently generating about 0.16 per unit of risk. If you would invest 403.00 in Medical Properties Trust on November 4, 2024 and sell it today you would earn a total of 47.00 from holding Medical Properties Trust or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Properties Trust vs. US FOODS HOLDING
Performance |
| Timeline |
| Medical Properties Trust |
| US FOODS HOLDING |
Medical Properties and US FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and US FOODS
The main advantage of trading using opposite Medical Properties and US FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, US FOODS 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 US FOODS will offset losses from the drop in US FOODS's long position.| 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 |
| US FOODS vs. AOYAMA TRADING | US FOODS vs. CDL INVESTMENT | US FOODS vs. Apollo Investment Corp | US FOODS vs. PennantPark Investment |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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