Correlation Between HR Real and Chartwell Retirement

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

By analyzing existing cross correlation between HR Real Estate and Chartwell Retirement Residences, you can compare the effects of market volatilities on HR Real and Chartwell Retirement 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 HR Real with a short position of Chartwell Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of HR Real and Chartwell Retirement.

Diversification Opportunities for HR Real and Chartwell Retirement

-0.28

Correlation Coefficient

HR Real  Chartwell Retirement

Very good diversification

The 3 months correlation between HR-UN and Chartwell is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HR Real Estate and Chartwell Retirement Residence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Retirement and HR Real 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 HR Real Estate are associated (or correlated) with Chartwell Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Retirement has no effect on the direction of HR Real i.e., HR Real and Chartwell Retirement go up and down completely randomly.

Pair Corralation between HR Real and Chartwell Retirement

Assuming the 90 days trading horizon HR Real Estate is expected to under-perform the Chartwell Retirement. But the stock apears to be less risky and, when comparing its historical volatility, HR Real Estate is 1.04 times less risky than Chartwell Retirement. The stock trades about -0.07 of its potential returns per unit of risk. The Chartwell Retirement Residences is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,448  in Chartwell Retirement Residences on September 2, 2024 and sell it today you would earn a total of  167.00  from holding Chartwell Retirement Residences or generate 11.53% return on investment over 90 days.

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

HR Real Estate  vs.  Chartwell Retirement Residence

HR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HR Real is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Chartwell Retirement

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Retirement Residences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Chartwell Retirement may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HR Real and Chartwell Retirement

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

The idea behind HR Real Estate and Chartwell Retirement Residences 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.