Correlation Between Healthpeak Properties and Micron Technology

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

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

Diversification Opportunities for Healthpeak Properties and Micron Technology

0.43

Correlation Coefficient

Healthpeak Properties  Micron Technology

Very weak diversification

The 3 months correlation between Healthpeak and Micron is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and Micron Technology go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Micron Technology

Assuming the 90 days horizon Healthpeak Properties is expected to generate 0.23 times more return on investment than Micron Technology. However, Healthpeak Properties is 4.39 times less risky than Micron Technology. It trades about -0.34 of its potential returns per unit of risk. Micron Technology is currently generating about -0.12 per unit of risk. If you would invest  2,080  in Healthpeak Properties on September 26, 2024 and sell it today you would lose (160.00) from holding Healthpeak Properties or give up 7.69% of portfolio value over 90 days.

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

Healthpeak Properties  vs.  Micron Technology

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Micron Technology

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Healthpeak Properties and Micron Technology

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

The idea behind Healthpeak Properties and Micron Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.