Correlation Between Medical Properties and MTI Wireless

Can any of the company-specific risk be diversified away by investing in both Medical Properties and MTI Wireless 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 MTI Wireless 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 MTI Wireless Edge, you can compare the effects of market volatilities on Medical Properties and MTI Wireless 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 MTI Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and MTI Wireless.

Diversification Opportunities for Medical Properties and MTI Wireless

0.59

Correlation Coefficient

Medical Properties  MTI Wireless

Very weak diversification

The 3 months correlation between Medical and MTI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and MTI Wireless Edge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI Wireless Edge 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 MTI Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI Wireless Edge has no effect on the direction of Medical Properties i.e., Medical Properties and MTI Wireless go up and down completely randomly.

Pair Corralation between Medical Properties and MTI Wireless

Assuming the 90 days trading horizon Medical Properties Trust is expected to generate 1.64 times more return on investment than MTI Wireless. However, Medical Properties is 1.64 times more volatile than MTI Wireless Edge. It trades about -0.11 of its potential returns per unit of risk. MTI Wireless Edge is currently generating about -0.18 per unit of risk. If you would invest  412.00  in Medical Properties Trust on September 17, 2024 and sell it today you would lose (18.00) from holding Medical Properties Trust or give up 4.37% of portfolio value over 90 days.

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

Medical Properties Trust  vs.  MTI Wireless Edge

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.

MTI Wireless Edge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTI Wireless Edge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Medical Properties and MTI Wireless

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

The idea behind Medical Properties Trust and MTI Wireless Edge 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.