Correlation Between Universal Health and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Universal Health and LTC 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 Universal Health and LTC Properties 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 LTC Properties, you can compare the effects of market volatilities on Universal Health and LTC 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 Universal Health with a short position of LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and LTC Properties.
Diversification Opportunities for Universal Health and LTC Properties
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and LTC is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties 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 LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Universal Health i.e., Universal Health and LTC Properties go up and down completely randomly.
Pair Corralation between Universal Health and LTC Properties
Considering the 90-day investment horizon Universal Health is expected to generate 7.37 times less return on investment than LTC Properties. In addition to that, Universal Health is 1.27 times more volatile than LTC Properties. It trades about 0.0 of its total potential returns per unit of risk. LTC Properties is currently generating about 0.04 per unit of volatility. If you would invest 3,150 in LTC Properties on August 31, 2024 and sell it today you would earn a total of 709.00 from holding LTC Properties or generate 22.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Health Realty vs. LTC Properties
Performance |
| Timeline |
| Universal Health Realty |
| LTC Properties |
Universal Health and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and LTC Properties
The main advantage of trading using opposite Universal Health and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, LTC 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 LTC Properties will offset losses from the drop in LTC Properties' long position.| Universal Health vs. LTC Properties | Universal Health vs. Omega Healthcare Investors | Universal Health vs. Ventas Inc | Universal Health vs. Community Healthcare Trust |
| LTC Properties vs. Omega Healthcare Investors | LTC Properties vs. Ventas Inc | LTC Properties vs. Community Healthcare 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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