Correlation Between CareTrust REIT and Healthcare Trust

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

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

Diversification Opportunities for CareTrust REIT and Healthcare Trust

0.42

Correlation Coefficient

CareTrust REIT  Healthcare Trust

Very weak diversification

The 3 months correlation between CareTrust and Healthcare is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust and CareTrust REIT 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 CareTrust REIT are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of CareTrust REIT i.e., CareTrust REIT and Healthcare Trust go up and down completely randomly.

Pair Corralation between CareTrust REIT and Healthcare Trust

Given the investment horizon of 90 days CareTrust REIT is expected to generate 1.41 times less return on investment than Healthcare Trust. But when comparing it to its historical volatility, CareTrust REIT is 1.01 times less risky than Healthcare Trust. It trades about 0.02 of its potential returns per unit of risk. Healthcare Trust PR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,440  in Healthcare Trust PR on October 18, 2024 and sell it today you would earn a total of  38.00  from holding Healthcare Trust PR or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.74%
Values	Daily Returns

CareTrust REIT  vs.  Healthcare Trust PR

CareTrust REIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust PR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CareTrust REIT and Healthcare Trust

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

The idea behind CareTrust REIT and Healthcare Trust PR 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.