Correlation Between Universal Health and Global Medical
Can any of the company-specific risk be diversified away by investing in both Universal Health and Global Medical 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 Global Medical 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 Global Medical REIT, you can compare the effects of market volatilities on Universal Health and Global Medical 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 Global Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Global Medical.
Diversification Opportunities for Universal Health and Global Medical
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Global is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and Global Medical REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Medical 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 Global Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Medical REIT has no effect on the direction of Universal Health i.e., Universal Health and Global Medical go up and down completely randomly.
Pair Corralation between Universal Health and Global Medical
Considering the 90-day investment horizon Universal Health Realty is expected to generate 1.4 times more return on investment than Global Medical. However, Universal Health is 1.4 times more volatile than Global Medical REIT. It trades about 0.12 of its potential returns per unit of risk. Global Medical REIT is currently generating about -0.02 per unit of risk. If you would invest 3,966 in Universal Health Realty on August 28, 2024 and sell it today you would earn a total of 127.00 from holding Universal Health Realty or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Realty vs. Global Medical REIT
Performance |
| Timeline |
| Universal Health Realty |
| Global Medical REIT |
Universal Health and Global Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Global Medical
The main advantage of trading using opposite Universal Health and Global Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Global Medical 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 Global Medical will offset losses from the drop in Global Medical'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 |
| Global Medical vs. Global Medical REIT | Global Medical vs. Community Healthcare Trust | Global Medical vs. National Health Investors | Global Medical 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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