Correlation Between TAL Education and Medical Properties
Can any of the company-specific risk be diversified away by investing in both TAL Education 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 TAL Education and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and Medical Properties Trust,, you can compare the effects of market volatilities on TAL Education 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 TAL Education with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Medical Properties.
Diversification Opportunities for TAL Education and Medical Properties
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TAL and Medical is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education 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 TAL Education 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 TAL Education 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 TAL Education i.e., TAL Education and Medical Properties go up and down completely randomly.
Pair Corralation between TAL Education and Medical Properties
Assuming the 90 days trading horizon TAL Education is expected to generate 1.58 times less return on investment than Medical Properties. But when comparing it to its historical volatility, TAL Education Group is 1.19 times less risky than Medical Properties. It trades about 0.04 of its potential returns per unit of risk. Medical Properties Trust, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,109 in Medical Properties Trust, on October 30, 2024 and sell it today you would earn a total of 273.00 from holding Medical Properties Trust, or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Medical Properties Trust,
Performance |
| Timeline |
| TAL Education Group |
| Medical Properties Trust, |
TAL Education and Medical Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Medical Properties
The main advantage of trading using opposite TAL Education and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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.| TAL Education vs. Chunghwa Telecom Co, | TAL Education vs. Academy Sports and | TAL Education vs. Unifique Telecomunicaes SA | TAL Education vs. Martin Marietta Materials, |
| Medical Properties vs. Truist Financial | Medical Properties vs. Jefferies Financial Group | Medical Properties vs. Capital One Financial | Medical Properties vs. British American Tobacco |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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