Correlation Between PPHE Hotel and Medical Properties
Can any of the company-specific risk be diversified away by investing in both PPHE Hotel and Medical Properties 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 PPHE Hotel and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPHE Hotel Group and Medical Properties Trust, you can compare the effects of market volatilities on PPHE Hotel and Medical Properties 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 PPHE Hotel with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Medical Properties.
Diversification Opportunities for PPHE Hotel and Medical Properties
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PPHE and Medical is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PPHE Hotel Group and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and PPHE Hotel 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 PPHE Hotel Group are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of PPHE Hotel i.e., PPHE Hotel and Medical Properties go up and down completely randomly.
Pair Corralation between PPHE Hotel and Medical Properties
Assuming the 90 days trading horizon PPHE Hotel Group is expected to generate 0.41 times more return on investment than Medical Properties. However, PPHE Hotel Group is 2.45 times less risky than Medical Properties. It trades about -0.03 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.18 per unit of risk. If you would invest 120,000 in PPHE Hotel Group on September 3, 2024 and sell it today you would lose (2,500) from holding PPHE Hotel Group or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. Medical Properties Trust
Performance |
| Timeline |
| PPHE Hotel Group |
| Medical Properties Trust |
PPHE Hotel and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Medical Properties
The main advantage of trading using opposite PPHE Hotel and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE Hotel position performs unexpectedly, Medical Properties 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 Medical Properties will offset losses from the drop in Medical Properties' long position.| PPHE Hotel vs. Sovereign Metals | PPHE Hotel vs. bet at home AG | PPHE Hotel vs. Gaztransport et Technigaz | PPHE Hotel vs. American Homes 4 |
| Medical Properties vs. Catalyst Media Group | Medical Properties vs. CATLIN GROUP | Medical Properties vs. Magnora ASA | Medical Properties vs. RTW Venture Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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