Correlation Between Welltower and Sun Communities
Can any of the company-specific risk be diversified away by investing in both Welltower and Sun Communities 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 Sun Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welltower and Sun Communities, you can compare the effects of market volatilities on Welltower and Sun Communities 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 Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and Sun Communities.
Diversification Opportunities for Welltower and Sun Communities
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Welltower and Sun is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Welltower and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities 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 Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of Welltower i.e., Welltower and Sun Communities go up and down completely randomly.
Pair Corralation between Welltower and Sun Communities
Given the investment horizon of 90 days Welltower is expected to generate 0.88 times more return on investment than Sun Communities. However, Welltower is 1.14 times less risky than Sun Communities. It trades about 0.12 of its potential returns per unit of risk. Sun Communities is currently generating about 0.0 per unit of risk. If you would invest 7,082 in Welltower on November 19, 2024 and sell it today you would earn a total of 7,915 from holding Welltower or generate 111.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Welltower vs. Sun Communities
Performance |
| Timeline |
| Welltower |
| Sun Communities |
Welltower and Sun Communities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welltower and Sun Communities
The main advantage of trading using opposite Welltower and Sun Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welltower position performs unexpectedly, Sun Communities 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 Sun Communities will offset losses from the drop in Sun Communities' long position.| Welltower vs. Healthcare Realty Trust | Welltower vs. Sabra Healthcare REIT | Welltower vs. National Health Investors | Welltower vs. Global Medical REIT |
| Sun Communities vs. Clipper Realty | Sun Communities vs. UDR Inc | Sun Communities vs. UMH Properties | Sun Communities vs. American Homes 4 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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