Correlation Between Healthcare Realty and Healthpeak Properties

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

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

Diversification Opportunities for Healthcare Realty and Healthpeak Properties

0.67

Correlation Coefficient

Healthcare Realty  Healthpeak Properties

Poor diversification

The 3 months correlation between Healthcare and Healthpeak is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and Healthcare Realty 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 Healthcare Realty Trust are associated (or correlated) with Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Healthpeak Properties go up and down completely randomly.

Pair Corralation between Healthcare Realty and Healthpeak Properties

Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 1.02 times less return on investment than Healthpeak Properties. But when comparing it to its historical volatility, Healthcare Realty Trust is 1.03 times less risky than Healthpeak Properties. It trades about 0.04 of its potential returns per unit of risk. Healthpeak Properties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,967  in Healthpeak Properties on December 30, 2024 and sell it today you would earn a total of  52.00  from holding Healthpeak Properties or generate 2.64% return on investment over 90 days.

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

Healthcare Realty Trust  vs.  Healthpeak Properties

Healthcare Realty Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Realty Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Healthcare Realty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Healthpeak Properties

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Healthpeak Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Healthpeak Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Healthcare Realty and Healthpeak Properties

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

The idea behind Healthcare Realty Trust and Healthpeak 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.