Correlation Between Medical Properties and Community Healthcare
Can any of the company-specific risk be diversified away by investing in both Medical Properties and Community Healthcare 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 Community Healthcare 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 Community Healthcare Trust, you can compare the effects of market volatilities on Medical Properties and Community Healthcare 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 Community Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Community Healthcare.
Diversification Opportunities for Medical Properties and Community Healthcare
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Medical and Community is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Community Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Healthcare 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 Community Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Healthcare has no effect on the direction of Medical Properties i.e., Medical Properties and Community Healthcare go up and down completely randomly.
Pair Corralation between Medical Properties and Community Healthcare
Considering the 90-day investment horizon Medical Properties Trust is expected to under-perform the Community Healthcare. In addition to that, Medical Properties is 2.55 times more volatile than Community Healthcare Trust. It trades about -0.1 of its total potential returns per unit of risk. Community Healthcare Trust is currently generating about 0.08 per unit of volatility. If you would invest 1,848 in Community Healthcare Trust on August 31, 2024 and sell it today you would earn a total of 41.00 from holding Community Healthcare Trust or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Medical Properties Trust vs. Community Healthcare Trust
Performance |
| Timeline |
| Medical Properties Trust |
| Community Healthcare |
Medical Properties and Community Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Community Healthcare
The main advantage of trading using opposite Medical Properties and Community Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Community Healthcare 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 Community Healthcare will offset losses from the drop in Community Healthcare's long position.| Medical Properties vs. LTC Properties | Medical Properties vs. Omega Healthcare Investors | Medical Properties vs. Ventas Inc | Medical Properties vs. Community Healthcare Trust |
| Community Healthcare vs. Global Medical REIT | Community Healthcare vs. National Health Investors | Community Healthcare vs. Healthpeak Properties | Community Healthcare vs. Sabra Healthcare REIT |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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