Correlation Between Green Brick and Global Medical

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

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

Diversification Opportunities for Green Brick and Global Medical

0.64

Correlation Coefficient

Green Brick  Global Medical

Poor diversification

The 3 months correlation between Green and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Green Brick Partners and Global Medical REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Medical REIT and Green Brick 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 Green Brick Partners are associated (or correlated) with Global Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Medical REIT has no effect on the direction of Green Brick i.e., Green Brick and Global Medical go up and down completely randomly.

Pair Corralation between Green Brick and Global Medical

Assuming the 90 days trading horizon Green Brick Partners is expected to generate 1.51 times more return on investment than Global Medical. However, Green Brick is 1.51 times more volatile than Global Medical REIT. It trades about 0.13 of its potential returns per unit of risk. Global Medical REIT is currently generating about 0.07 per unit of risk. If you would invest  2,261  in Green Brick Partners on December 27, 2024 and sell it today you would earn a total of  128.00  from holding Green Brick Partners or generate 5.66% return on investment over 90 days.

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

Green Brick Partners  vs.  Global Medical REIT

Green Brick Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green Brick Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Green Brick is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Medical REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Medical REIT are ranked lower than 5 (%) 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.

Pair Trading with Green Brick and Global Medical

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

The idea behind Green Brick Partners and Global Medical REIT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.