Correlation Between Healthpeak Properties and Carsales

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

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

Diversification Opportunities for Healthpeak Properties and Carsales

0.41

Correlation Coefficient

Healthpeak Properties  Carsales

Very weak diversification

The 3 months correlation between Healthpeak and Carsales is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and Carsales go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Carsales

Assuming the 90 days horizon Healthpeak Properties is expected to under-perform the Carsales. In addition to that, Healthpeak Properties is 1.02 times more volatile than CarsalesCom. It trades about 0.0 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.08 per unit of volatility. If you would invest  1,310  in CarsalesCom on October 11, 2024 and sell it today you would earn a total of  910.00  from holding CarsalesCom or generate 69.47% 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.  CarsalesCom

Healthpeak Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Healthpeak Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Healthpeak Properties is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CarsalesCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CarsalesCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carsales 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 Carsales

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

The idea behind Healthpeak Properties and CarsalesCom 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.