Correlation Between Global Medical and CBL Associates

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

Diversification Opportunities for Global Medical and CBL Associates

-0.67

Correlation Coefficient

Global Medical  CBL Associates

Excellent diversification

The 3 months correlation between Global and CBL is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates Properties 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 CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of Global Medical i.e., Global Medical and CBL Associates go up and down completely randomly.

Pair Corralation between Global Medical and CBL Associates

Given the investment horizon of 90 days Global Medical REIT is expected to generate 1.11 times more return on investment than CBL Associates. However, Global Medical is 1.11 times more volatile than CBL Associates Properties. It trades about -0.1 of its potential returns per unit of risk. CBL Associates Properties is currently generating about -0.24 per unit of risk. If you would invest  818.00  in Global Medical REIT on October 17, 2024 and sell it today you would lose (30.00) from holding Global Medical REIT or give up 3.67% of portfolio value over 90 days.

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

Global Medical REIT  vs.  CBL Associates Properties

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. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CBL Associates Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Global Medical and CBL Associates

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

The idea behind Global Medical REIT and CBL Associates Properties 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..