Correlation Between Healthcare Realty and ArcelorMittal

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

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

Diversification Opportunities for Healthcare Realty and ArcelorMittal

0.25

Correlation Coefficient

Healthcare Realty  ArcelorMittal

Modest diversification

The 3 months correlation between Healthcare and ArcelorMittal is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA and Healthcare Realty 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 Healthcare Realty Trust are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and ArcelorMittal go up and down completely randomly.

Pair Corralation between Healthcare Realty and ArcelorMittal

Assuming the 90 days trading horizon Healthcare Realty Trust is expected to generate 1.01 times more return on investment than ArcelorMittal. However, Healthcare Realty is 1.01 times more volatile than ArcelorMittal SA. It trades about 0.04 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.02 per unit of risk. If you would invest  2,341  in Healthcare Realty Trust on October 25, 2024 and sell it today you would earn a total of  71.00  from holding Healthcare Realty Trust or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.93%
Values	Daily Returns

Healthcare Realty Trust  vs.  ArcelorMittal SA

Healthcare Realty Trust

Risk-Adjusted Performance

0 of 100

Insignificant

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

ArcelorMittal SA

Risk-Adjusted Performance

1 of 100

Insignificant

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

Pair Trading with Healthcare Realty and ArcelorMittal

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

The idea behind Healthcare Realty Trust and ArcelorMittal SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.