Correlation Between Medical Properties and Tamburi Investment

Can any of the company-specific risk be diversified away by investing in both Medical Properties and Tamburi Investment 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 Medical Properties and Tamburi Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medical Properties Trust and Tamburi Investment Partners, you can compare the effects of market volatilities on Medical Properties and Tamburi Investment 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 Medical Properties with a short position of Tamburi Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Tamburi Investment.

Diversification Opportunities for Medical Properties and Tamburi Investment

0.85

Correlation Coefficient

Medical Properties  Tamburi Investment

Very poor diversification

The 3 months correlation between Medical and Tamburi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Tamburi Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamburi Investment and Medical Properties 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 Medical Properties Trust are associated (or correlated) with Tamburi Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamburi Investment has no effect on the direction of Medical Properties i.e., Medical Properties and Tamburi Investment go up and down completely randomly.

Pair Corralation between Medical Properties and Tamburi Investment

Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the Tamburi Investment. In addition to that, Medical Properties is 2.83 times more volatile than Tamburi Investment Partners. It trades about -0.2 of its total potential returns per unit of risk. Tamburi Investment Partners is currently generating about -0.17 per unit of volatility. If you would invest  930.00  in Tamburi Investment Partners on September 19, 2024 and sell it today you would lose (96.00) from holding Tamburi Investment Partners or give up 10.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Medical Properties Trust  vs.  Tamburi Investment Partners

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tamburi Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tamburi Investment Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Medical Properties and Tamburi Investment

The main advantage of trading using opposite Medical Properties and Tamburi Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Tamburi Investment 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 Tamburi Investment will offset losses from the drop in Tamburi Investment's long position.

The idea behind Medical Properties Trust and Tamburi Investment Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.