Correlation Between Global Medical and Agree Realty

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

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

Diversification Opportunities for Global Medical and Agree Realty

-0.26

Correlation Coefficient

Global Medical  Agree Realty

Very good diversification

The 3 months correlation between Global and Agree is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty and Global Medical 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 Global Medical REIT are associated (or correlated) with Agree Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agree Realty has no effect on the direction of Global Medical i.e., Global Medical and Agree Realty go up and down completely randomly.

Pair Corralation between Global Medical and Agree Realty

Assuming the 90 days trading horizon Global Medical REIT is expected to generate 0.63 times more return on investment than Agree Realty. However, Global Medical REIT is 1.58 times less risky than Agree Realty. It trades about 0.02 of its potential returns per unit of risk. Agree Realty is currently generating about 0.0 per unit of risk. If you would invest  2,497  in Global Medical REIT on September 3, 2024 and sell it today you would earn a total of  23.00  from holding Global Medical REIT or generate 0.92% return on investment over 90 days.

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

Global Medical REIT  vs.  Agree Realty

Global Medical REIT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Medical REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Agree Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agree Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Agree Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Medical and Agree Realty

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

The idea behind Global Medical REIT and Agree Realty 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.