Correlation Between Healthpeak Properties and Northrop Grumman
Can any of the company-specific risk be diversified away by investing in both Healthpeak Properties and Northrop Grumman 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 Healthpeak Properties and Northrop Grumman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Healthpeak Properties and Northrop Grumman, you can compare the effects of market volatilities on Healthpeak Properties and Northrop Grumman 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 Healthpeak Properties with a short position of Northrop Grumman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthpeak Properties and Northrop Grumman.
Diversification Opportunities for Healthpeak Properties and Northrop Grumman
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Healthpeak and Northrop is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and Northrop Grumman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrop Grumman and Healthpeak 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 Healthpeak Properties are associated (or correlated) with Northrop Grumman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrop Grumman has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and Northrop Grumman go up and down completely randomly.
Pair Corralation between Healthpeak Properties and Northrop Grumman
Assuming the 90 days trading horizon Healthpeak Properties is expected to generate 2.45 times more return on investment than Northrop Grumman. However, Healthpeak Properties is 2.45 times more volatile than Northrop Grumman. It trades about 0.02 of its potential returns per unit of risk. Northrop Grumman is currently generating about 0.02 per unit of risk. If you would invest 13,369 in Healthpeak Properties on August 30, 2024 and sell it today you would lose (57.00) from holding Healthpeak Properties or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.06% |
| Values | Daily Returns |
Healthpeak Properties vs. Northrop Grumman
Performance |
| Timeline |
| Healthpeak Properties |
| Northrop Grumman |
Healthpeak Properties and Northrop Grumman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthpeak Properties and Northrop Grumman
The main advantage of trading using opposite Healthpeak Properties and Northrop Grumman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthpeak Properties position performs unexpectedly, Northrop Grumman 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 Northrop Grumman will offset losses from the drop in Northrop Grumman's long position.| Healthpeak Properties vs. NVIDIA | Healthpeak Properties vs. Direcional Engenharia SA | Healthpeak Properties vs. Banco do Estado | Healthpeak Properties vs. CA Modas SA |
| Northrop Grumman vs. Spotify Technology SA | Northrop Grumman vs. CM Hospitalar SA | Northrop Grumman vs. Taiwan Semiconductor Manufacturing | Northrop Grumman 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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