Correlation Between Healthcare Realty and Global Medical

Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Global Medical 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 Global Medical 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 Global Medical REIT, you can compare the effects of market volatilities on Healthcare Realty and Global Medical 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 Global Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Global Medical.

Diversification Opportunities for Healthcare Realty and Global Medical

0.71

Correlation Coefficient

Healthcare Realty  Global Medical

Poor diversification

The 3 months correlation between Healthcare and Global is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Global Medical REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Medical REIT 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 Global Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Medical REIT has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Global Medical go up and down completely randomly.

Pair Corralation between Healthcare Realty and Global Medical

Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 5.76 times less return on investment than Global Medical. But when comparing it to its historical volatility, Healthcare Realty Trust is 1.08 times less risky than Global Medical. It trades about 0.04 of its potential returns per unit of risk. Global Medical REIT is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  735.00  in Global Medical REIT on December 29, 2024 and sell it today you would earn a total of  139.00  from holding Global Medical REIT or generate 18.91% 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.  Global Medical REIT

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.

Global Medical REIT

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Medical REIT are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Global Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Realty and Global Medical

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

The idea behind Healthcare Realty Trust and Global Medical REIT 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.