Correlation Between Apple and Medical Properties

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

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

Diversification Opportunities for Apple and Medical Properties

-0.76

Correlation Coefficient

Apple  Medical Properties

Pay attention - limited upside

The 3 months correlation between Apple and Medical is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and Apple 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 Apple Inc are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Apple i.e., Apple and Medical Properties go up and down completely randomly.

Pair Corralation between Apple and Medical Properties

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.35 times more return on investment than Medical Properties. However, Apple Inc is 2.83 times less risky than Medical Properties. It trades about 0.29 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.12 per unit of risk. If you would invest  21,155  in Apple Inc on October 9, 2024 and sell it today you would earn a total of  2,515  from holding Apple Inc or generate 11.89% return on investment over 90 days.

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

Apple Inc  vs.  Medical Properties Trust

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apple and Medical Properties

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

The idea behind Apple Inc and Medical Properties 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.