Correlation Between Medical Properties and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both Medical Properties and WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL , you can compare the effects of market volatilities on Medical Properties and WESTERN DIGITAL 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 WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and WESTERN DIGITAL.
Diversification Opportunities for Medical Properties and WESTERN DIGITAL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Medical and WESTERN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of Medical Properties i.e., Medical Properties and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between Medical Properties and WESTERN DIGITAL
Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 2.78 times more return on investment than WESTERN DIGITAL. However, Medical Properties is 2.78 times more volatile than WESTERN DIGITAL . It trades about 0.31 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about -0.11 per unit of risk. If you would invest 385.00 in Medical Properties Trust on November 8, 2024 and sell it today you would earn a total of 78.00 from holding Medical Properties Trust or generate 20.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 18.18% |
| Values | Daily Returns |
Medical Properties Trust vs. WESTERN DIGITAL
Performance |
| Timeline |
| Medical Properties Trust |
| WESTERN DIGITAL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Medical Properties and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and WESTERN DIGITAL
The main advantage of trading using opposite Medical Properties and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, WESTERN DIGITAL 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 WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| Medical Properties vs. China National Building | Medical Properties vs. APPLIED MATERIALS | Medical Properties vs. ARDAGH METAL PACDL 0001 | Medical Properties vs. GOODYEAR T RUBBER |
| WESTERN DIGITAL vs. UPDATE SOFTWARE | WESTERN DIGITAL vs. Japan Tobacco | WESTERN DIGITAL vs. British American Tobacco | WESTERN DIGITAL vs. Take Two Interactive Software |
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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