Correlation Between HEALTHSTREAM (HL5SG) and Medical Properties

Can any of the company-specific risk be diversified away by investing in both HEALTHSTREAM (HL5SG) and Medical 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 HEALTHSTREAM (HL5SG) and Medical Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEALTHSTREAM and Medical Properties Trust, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) and Medical 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 HEALTHSTREAM (HL5SG) with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and Medical Properties.

Diversification Opportunities for HEALTHSTREAM (HL5SG) and Medical Properties

-0.69

Correlation Coefficient

HEALTHSTREAM (HL5SG)  Medical Properties

Excellent diversification

The 3 months correlation between HEALTHSTREAM and Medical is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and Medical Properties go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and Medical Properties

Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.33 times more return on investment than Medical Properties. However, HEALTHSTREAM is 3.0 times less risky than Medical Properties. It trades about 0.01 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.0 per unit of risk. If you would invest  3,100  in HEALTHSTREAM on October 11, 2024 and sell it today you would earn a total of  0.00  from holding HEALTHSTREAM or generate 0.0% return on investment over 90 days.

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

HEALTHSTREAM  vs.  Medical Properties Trust

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HEALTHSTREAM are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HEALTHSTREAM (HL5SG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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 HEALTHSTREAM (HL5SG) and Medical Properties

The main advantage of trading using opposite HEALTHSTREAM (HL5SG) and Medical Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHSTREAM (HL5SG) position performs unexpectedly, Medical 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 Medical Properties will offset losses from the drop in Medical Properties' long position.

The idea behind HEALTHSTREAM and Medical Properties Trust 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 Global Correlations module to find global opportunities by holding instruments from different markets.