Correlation Between Power REIT and Welltower
Can any of the company-specific risk be diversified away by investing in both Power REIT and Welltower 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 Power REIT and Welltower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Welltower, you can compare the effects of market volatilities on Power REIT and Welltower 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 Power REIT with a short position of Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Welltower.
Diversification Opportunities for Power REIT and Welltower
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Welltower is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower and Power REIT 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 Power REIT are associated (or correlated) with Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Power REIT i.e., Power REIT and Welltower go up and down completely randomly.
Pair Corralation between Power REIT and Welltower
Allowing for the 90-day total investment horizon Power REIT is expected to generate 10.34 times more return on investment than Welltower. However, Power REIT is 10.34 times more volatile than Welltower. It trades about 0.07 of its potential returns per unit of risk. Welltower is currently generating about 0.17 per unit of risk. If you would invest 61.00 in Power REIT on August 26, 2024 and sell it today you would earn a total of 44.00 from holding Power REIT or generate 72.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Power REIT vs. Welltower
Performance |
Timeline |
Power REIT |
Welltower |
Power REIT and Welltower Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power REIT and Welltower
The main advantage of trading using opposite Power REIT and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower's long position.Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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