Correlation Between Global Medical and Saul Centers

Can any of the company-specific risk be diversified away by investing in both Global Medical and Saul Centers 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 Saul Centers 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 Saul Centers, you can compare the effects of market volatilities on Global Medical and Saul Centers 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 Saul Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Saul Centers.

Diversification Opportunities for Global Medical and Saul Centers

0.44

Correlation Coefficient

Global Medical  Saul Centers

Very weak diversification

The 3 months correlation between Global and Saul is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Saul Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saul Centers 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 Saul Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saul Centers has no effect on the direction of Global Medical i.e., Global Medical and Saul Centers go up and down completely randomly.

Pair Corralation between Global Medical and Saul Centers

Assuming the 90 days trading horizon Global Medical REIT is expected to generate 0.22 times more return on investment than Saul Centers. However, Global Medical REIT is 4.55 times less risky than Saul Centers. It trades about -0.22 of its potential returns per unit of risk. Saul Centers is currently generating about -0.15 per unit of risk. If you would invest  2,529  in Global Medical REIT on September 24, 2024 and sell it today you would lose (44.00) from holding Global Medical REIT or give up 1.74% of portfolio value over 90 days.

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

Global Medical REIT  vs.  Saul Centers

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Saul Centers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saul Centers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Saul Centers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Medical and Saul Centers

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

The idea behind Global Medical REIT and Saul Centers 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.