Correlation Between American Healthcare and LXP Industrial

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

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

Diversification Opportunities for American Healthcare and LXP Industrial

-0.55

Correlation Coefficient

American Healthcare  LXP Industrial

Excellent diversification

The 3 months correlation between American and LXP is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and LXP Industrial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LXP Industrial Trust and American Healthcare 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 American Healthcare REIT, are associated (or correlated) with LXP Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LXP Industrial Trust has no effect on the direction of American Healthcare i.e., American Healthcare and LXP Industrial go up and down completely randomly.

Pair Corralation between American Healthcare and LXP Industrial

Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 0.95 times more return on investment than LXP Industrial. However, American Healthcare REIT, is 1.06 times less risky than LXP Industrial. It trades about -0.07 of its potential returns per unit of risk. LXP Industrial Trust is currently generating about -0.32 per unit of risk. If you would invest  2,835  in American Healthcare REIT, on September 22, 2024 and sell it today you would lose (60.00) from holding American Healthcare REIT, or give up 2.12% of portfolio value over 90 days.

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

American Healthcare REIT,  vs.  LXP Industrial Trust

American Healthcare REIT,

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical indicators, American Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LXP Industrial Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LXP Industrial Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with American Healthcare and LXP Industrial

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

The idea behind American Healthcare REIT, and LXP Industrial 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.