Correlation Between Alstria Office and Worldwide Healthcare

Can any of the company-specific risk be diversified away by investing in both Alstria Office and Worldwide Healthcare 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 Alstria Office and Worldwide Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alstria office REIT AG and Worldwide Healthcare Trust, you can compare the effects of market volatilities on Alstria Office and Worldwide Healthcare 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 Alstria Office with a short position of Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Worldwide Healthcare.

Diversification Opportunities for Alstria Office and Worldwide Healthcare

-0.84

Correlation Coefficient

Alstria Office  Worldwide Healthcare

Pay attention - limited upside

The 3 months correlation between Alstria and Worldwide is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare and Alstria Office 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 alstria office REIT AG are associated (or correlated) with Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Alstria Office i.e., Alstria Office and Worldwide Healthcare go up and down completely randomly.

Pair Corralation between Alstria Office and Worldwide Healthcare

Assuming the 90 days trading horizon alstria office REIT AG is expected to generate 4.82 times more return on investment than Worldwide Healthcare. However, Alstria Office is 4.82 times more volatile than Worldwide Healthcare Trust. It trades about 0.1 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.03 per unit of risk. If you would invest  298.00  in alstria office REIT AG on September 23, 2024 and sell it today you would earn a total of  463.00  from holding alstria office REIT AG or generate 155.37% return on investment over 90 days.

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

alstria office REIT AG  vs.  Worldwide Healthcare Trust

alstria office REIT

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Alstria Office disclosed solid returns over the last few months and may actually be approaching a breakup point.

Worldwide Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldwide Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Alstria Office and Worldwide Healthcare

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

The idea behind alstria office REIT AG and Worldwide Healthcare Trust 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 Global Correlations module to find global opportunities by holding instruments from different markets.