Correlation Between Welltower and National Retail
Can any of the company-specific risk be diversified away by investing in both Welltower and National Retail 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 National Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and National Retail Properties, you can compare the effects of market volatilities on Welltower and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and National Retail.
Diversification Opportunities for Welltower and National Retail
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Welltower and National is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Welltower and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Welltower i.e., Welltower and National Retail go up and down completely randomly.
Pair Corralation between Welltower and National Retail
Given the investment horizon of 90 days Welltower is expected to generate 1.05 times more return on investment than National Retail. However, Welltower is 1.05 times more volatile than National Retail Properties. It trades about 0.22 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.06 per unit of risk. If you would invest 10,296 in Welltower on August 30, 2024 and sell it today you would earn a total of 3,634 from holding Welltower or generate 35.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Welltower vs. National Retail Properties
Performance |
| Timeline |
| Welltower |
| National Retail Prop |
Welltower and National Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and National Retail
The main advantage of trading using opposite Welltower and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.| Welltower vs. Boston Properties | Welltower vs. Douglas Emmett | Welltower vs. Kilroy Realty Corp | Welltower vs. Highwoods Properties |
| National Retail vs. Saul Centers | National Retail vs. Site Centers Corp | National Retail vs. Acadia Realty Trust | National Retail vs. Retail Opportunity Investments |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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