Correlation Between Healthcare Realty and Iron Mountain

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

Diversification Opportunities for Healthcare Realty and Iron Mountain

-0.21

Correlation Coefficient

Healthcare Realty  Iron Mountain

Very good diversification

The 3 months correlation between Healthcare and Iron is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Iron Mountain go up and down completely randomly.

Pair Corralation between Healthcare Realty and Iron Mountain

Assuming the 90 days trading horizon Healthcare Realty is expected to generate 21.32 times less return on investment than Iron Mountain. But when comparing it to its historical volatility, Healthcare Realty Trust is 1.29 times less risky than Iron Mountain. It trades about 0.01 of its potential returns per unit of risk. Iron Mountain Incorporated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  28,525  in Iron Mountain Incorporated on October 25, 2024 and sell it today you would earn a total of  32,483  from holding Iron Mountain Incorporated or generate 113.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.32%
Values	Daily Returns

Healthcare Realty Trust  vs.  Iron Mountain Incorporated

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.

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Healthcare Realty and Iron Mountain

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

The idea behind Healthcare Realty Trust and Iron Mountain Incorporated 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.