Correlation Between Welltower and CubeSmart
Can any of the company-specific risk be diversified away by investing in both Welltower and CubeSmart 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 Welltower and CubeSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and CubeSmart, you can compare the effects of market volatilities on Welltower and CubeSmart 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 Welltower with a short position of CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and CubeSmart.
Diversification Opportunities for Welltower and CubeSmart
Excellent diversification
The 3 months correlation between Welltower and CubeSmart is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Welltower and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart and Welltower 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 Welltower are associated (or correlated) with CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Welltower i.e., Welltower and CubeSmart go up and down completely randomly.
Pair Corralation between Welltower and CubeSmart
Given the investment horizon of 90 days Welltower is expected to generate 0.91 times more return on investment than CubeSmart. However, Welltower is 1.1 times less risky than CubeSmart. It trades about 0.19 of its potential returns per unit of risk. CubeSmart is currently generating about 0.06 per unit of risk. If you would invest 12,993 in Welltower on August 27, 2024 and sell it today you would earn a total of 798.00 from holding Welltower or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Welltower vs. CubeSmart
Performance |
| Timeline |
| Welltower |
| CubeSmart |
Welltower and CubeSmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and CubeSmart
The main advantage of trading using opposite Welltower and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart's long position.| Welltower vs. Healthcare Realty Trust | Welltower vs. Sabra Healthcare REIT | Welltower vs. National Health Investors | Welltower vs. Global Medical REIT |
| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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