Correlation Between Healthcare Realty and Wix

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

Diversification Opportunities for Healthcare Realty and Wix

0.84

Correlation Coefficient

Healthcare Realty  Wix

Very poor diversification

The 3 months correlation between Healthcare and Wix is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Wix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wix 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 Wix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wix has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Wix go up and down completely randomly.

Pair Corralation between Healthcare Realty and Wix

Assuming the 90 days trading horizon Healthcare Realty is expected to generate 6.21 times less return on investment than Wix. But when comparing it to its historical volatility, Healthcare Realty Trust is 2.3 times less risky than Wix. It trades about 0.08 of its potential returns per unit of risk. Wix is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,185  in Wix on October 7, 2024 and sell it today you would earn a total of  1,366  from holding Wix or generate 42.89% return on investment over 90 days.

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

Healthcare Realty Trust  vs.  Wix

Healthcare Realty Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Healthcare Realty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wix

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wix are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Wix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Realty and Wix

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

The idea behind Healthcare Realty Trust and Wix 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.