Correlation Between Ventas and Diversified Healthcare
Can any of the company-specific risk be diversified away by investing in both Ventas and Diversified Healthcare 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 Ventas and Diversified Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ventas Inc and Diversified Healthcare Trust, you can compare the effects of market volatilities on Ventas and Diversified Healthcare 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 Ventas with a short position of Diversified Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ventas and Diversified Healthcare.
Diversification Opportunities for Ventas and Diversified Healthcare
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ventas and Diversified is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and Diversified Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Healthcare and Ventas 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 Ventas Inc are associated (or correlated) with Diversified Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Healthcare has no effect on the direction of Ventas i.e., Ventas and Diversified Healthcare go up and down completely randomly.
Pair Corralation between Ventas and Diversified Healthcare
Considering the 90-day investment horizon Ventas Inc is expected to generate 0.32 times more return on investment than Diversified Healthcare. However, Ventas Inc is 3.15 times less risky than Diversified Healthcare. It trades about 0.08 of its potential returns per unit of risk. Diversified Healthcare Trust is currently generating about 0.02 per unit of risk. If you would invest 4,233 in Ventas Inc on August 31, 2024 and sell it today you would earn a total of 2,174 from holding Ventas Inc or generate 51.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ventas Inc vs. Diversified Healthcare Trust
Performance |
| Timeline |
| Ventas Inc |
| Diversified Healthcare |
Ventas and Diversified Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ventas and Diversified Healthcare
The main advantage of trading using opposite Ventas and Diversified Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ventas position performs unexpectedly, Diversified Healthcare 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 Diversified Healthcare will offset losses from the drop in Diversified Healthcare's long position.| Ventas vs. Healthcare Realty Trust | Ventas vs. Healthpeak Properties | Ventas vs. Universal Health Realty | Ventas vs. Global Medical REIT |
| Diversified Healthcare vs. LTC Properties | Diversified Healthcare vs. Omega Healthcare Investors | Diversified Healthcare vs. Ventas Inc | Diversified Healthcare 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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