Correlation Between Gaucho Group and Healthcare Trust
Can any of the company-specific risk be diversified away by investing in both Gaucho Group and Healthcare Trust 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 Gaucho Group and Healthcare Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaucho Group Holdings and Healthcare Trust PR, you can compare the effects of market volatilities on Gaucho Group and Healthcare Trust 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 Gaucho Group with a short position of Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaucho Group and Healthcare Trust.
Diversification Opportunities for Gaucho Group and Healthcare Trust
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gaucho and Healthcare is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gaucho Group Holdings and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust and Gaucho Group 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 Gaucho Group Holdings are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Gaucho Group i.e., Gaucho Group and Healthcare Trust go up and down completely randomly.
Pair Corralation between Gaucho Group and Healthcare Trust
Given the investment horizon of 90 days Gaucho Group Holdings is expected to under-perform the Healthcare Trust. In addition to that, Gaucho Group is 19.9 times more volatile than Healthcare Trust PR. It trades about -0.23 of its total potential returns per unit of risk. Healthcare Trust PR is currently generating about -0.13 per unit of volatility. If you would invest 1,640 in Healthcare Trust PR on August 24, 2024 and sell it today you would lose (41.00) from holding Healthcare Trust PR or give up 2.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gaucho Group Holdings vs. Healthcare Trust PR
Performance |
Timeline |
Gaucho Group Holdings |
Healthcare Trust |
Gaucho Group and Healthcare Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gaucho Group and Healthcare Trust
The main advantage of trading using opposite Gaucho Group and Healthcare Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaucho Group position performs unexpectedly, Healthcare Trust 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 Healthcare Trust will offset losses from the drop in Healthcare Trust's long position.The idea behind Gaucho Group Holdings and Healthcare Trust PR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Healthcare Trust vs. Gladstone Commercial Corp | Healthcare Trust vs. Medalist Diversified Reit | Healthcare Trust vs. Heartland Financial USA | Healthcare Trust vs. Sotherly Hotels PR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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