Correlation Between NYSE Composite and American Healthcare
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and American 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 NYSE Composite and American Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and American Healthcare REIT,, you can compare the effects of market volatilities on NYSE Composite and American 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 NYSE Composite with a short position of American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and American Healthcare.
Diversification Opportunities for NYSE Composite and American Healthcare
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and American is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, and NYSE Composite 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 NYSE Composite are associated (or correlated) with American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of NYSE Composite i.e., NYSE Composite and American Healthcare go up and down completely randomly.
Pair Corralation between NYSE Composite and American Healthcare
Assuming the 90 days trading horizon NYSE Composite is expected to generate 6.25 times less return on investment than American Healthcare. But when comparing it to its historical volatility, NYSE Composite is 2.47 times less risky than American Healthcare. It trades about 0.14 of its potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,438 in American Healthcare REIT, on August 30, 2024 and sell it today you would earn a total of 1,519 from holding American Healthcare REIT, or generate 105.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. American Healthcare REIT,
Performance |
| Timeline |
NYSE Composite and American Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
American Healthcare REIT,
Pair trading matchups for American Healthcare
Pair Trading with NYSE Composite and American Healthcare
The main advantage of trading using opposite NYSE Composite and American Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, American 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 American Healthcare will offset losses from the drop in American Healthcare's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| American Healthcare vs. Boston Properties | American Healthcare vs. Douglas Emmett | American Healthcare vs. Kilroy Realty Corp | American Healthcare vs. Highwoods Properties |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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