Correlation Between Bitcoin and Medical Properties

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

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

Diversification Opportunities for Bitcoin and Medical Properties

-0.49

Correlation Coefficient

Bitcoin  Medical Properties

Very good diversification

The 3 months correlation between Bitcoin and Medical is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin 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 Bitcoin 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 Bitcoin 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 Bitcoin i.e., Bitcoin and Medical Properties go up and down completely randomly.

Pair Corralation between Bitcoin and Medical Properties

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.6 times more return on investment than Medical Properties. However, Bitcoin is 1.66 times less risky than Medical Properties. It trades about 0.23 of its potential returns per unit of risk. Medical Properties Trust, is currently generating about -0.01 per unit of risk. If you would invest  6,251,742  in Bitcoin on October 10, 2024 and sell it today you would earn a total of  3,448,595  from holding Bitcoin or generate 55.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Bitcoin  vs.  Medical Properties Trust,

Bitcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin 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. Despite somewhat strong basic indicators, Medical Properties is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bitcoin and Medical Properties

The main advantage of trading using opposite Bitcoin and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin 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 Bitcoin 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.