Correlation Between Welltower and Invitation Homes
Can any of the company-specific risk be diversified away by investing in both Welltower and Invitation Homes 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 Invitation Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and Invitation Homes, you can compare the effects of market volatilities on Welltower and Invitation Homes 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 Invitation Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and Invitation Homes.
Diversification Opportunities for Welltower and Invitation Homes
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Welltower and Invitation is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Welltower and Invitation Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invitation Homes 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 Invitation Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invitation Homes has no effect on the direction of Welltower i.e., Welltower and Invitation Homes go up and down completely randomly.
Pair Corralation between Welltower and Invitation Homes
Given the investment horizon of 90 days Welltower is expected to generate 0.99 times more return on investment than Invitation Homes. However, Welltower is 1.01 times less risky than Invitation Homes. It trades about 0.12 of its potential returns per unit of risk. Invitation Homes is currently generating about 0.03 per unit of risk. If you would invest 6,463 in Welltower on August 27, 2024 and sell it today you would earn a total of 7,328 from holding Welltower or generate 113.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Welltower vs. Invitation Homes
Performance |
| Timeline |
| Welltower |
| Invitation Homes |
Welltower and Invitation Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and Invitation Homes
The main advantage of trading using opposite Welltower and Invitation Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower position performs unexpectedly, Invitation Homes 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 Invitation Homes will offset losses from the drop in Invitation Homes' long position.| Welltower vs. Healthcare Realty Trust | Welltower vs. Sabra Healthcare REIT | Welltower vs. National Health Investors | Welltower vs. Global Medical REIT |
| Invitation Homes vs. American Homes 4 | Invitation Homes vs. Mid America Apartment Communities | Invitation Homes vs. Camden Property Trust | Invitation Homes vs. Sun Communities |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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