Correlation Between Healthpeak Properties and LTC Properties

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

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

Diversification Opportunities for Healthpeak Properties and LTC Properties

0.57

Correlation Coefficient

Healthpeak Properties  LTC Properties

Very weak diversification

The 3 months correlation between Healthpeak and LTC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties and Healthpeak Properties 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 Healthpeak Properties are associated (or correlated) with LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and LTC Properties go up and down completely randomly.

Pair Corralation between Healthpeak Properties and LTC Properties

Assuming the 90 days horizon Healthpeak Properties is expected to generate 40.95 times less return on investment than LTC Properties. But when comparing it to its historical volatility, Healthpeak Properties is 1.01 times less risky than LTC Properties. It trades about 0.0 of its potential returns per unit of risk. LTC Properties is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,206  in LTC Properties on October 12, 2024 and sell it today you would earn a total of  132.00  from holding LTC Properties or generate 4.12% return on investment over 90 days.

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

Healthpeak Properties  vs.  LTC Properties

Healthpeak Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Healthpeak Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LTC Properties

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LTC Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, LTC Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Healthpeak Properties and LTC Properties

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

The idea behind Healthpeak Properties and LTC 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.