Correlation Between Universal Health and CareTrust REIT
Can any of the company-specific risk be diversified away by investing in both Universal Health and CareTrust REIT 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 Universal Health and CareTrust REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Realty and CareTrust REIT, you can compare the effects of market volatilities on Universal Health and CareTrust REIT 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 Universal Health with a short position of CareTrust REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and CareTrust REIT.
Diversification Opportunities for Universal Health and CareTrust REIT
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and CareTrust is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and CareTrust REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareTrust REIT and Universal Health 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 Universal Health Realty are associated (or correlated) with CareTrust REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareTrust REIT has no effect on the direction of Universal Health i.e., Universal Health and CareTrust REIT go up and down completely randomly.
Pair Corralation between Universal Health and CareTrust REIT
Considering the 90-day investment horizon Universal Health Realty is expected to generate 0.86 times more return on investment than CareTrust REIT. However, Universal Health Realty is 1.16 times less risky than CareTrust REIT. It trades about 0.27 of its potential returns per unit of risk. CareTrust REIT is currently generating about 0.0 per unit of risk. If you would invest 3,613 in Universal Health Realty on November 8, 2024 and sell it today you would earn a total of 336.00 from holding Universal Health Realty or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Realty vs. CareTrust REIT
Performance |
| Timeline |
| Universal Health Realty |
| CareTrust REIT |
Universal Health and CareTrust REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and CareTrust REIT
The main advantage of trading using opposite Universal Health and CareTrust REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, CareTrust REIT 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 CareTrust REIT will offset losses from the drop in CareTrust REIT's long position.| Universal Health vs. Healthcare Realty Trust | Universal Health vs. Healthpeak Properties | Universal Health vs. Sabra Healthcare REIT | Universal Health vs. Community Healthcare Trust |
| CareTrust REIT vs. Global Medical REIT | CareTrust REIT vs. Universal Health Realty | CareTrust REIT vs. Healthpeak Properties | CareTrust REIT vs. Healthcare Realty Trust |
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 CEOs Directory module to screen CEOs from public companies around the world.
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