Correlation Between Healthcare Trust and Global Medical

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

Diversification Opportunities for Healthcare Trust and Global Medical

0.83

Correlation Coefficient

Healthcare Trust  Global Medical

Very poor diversification

The 3 months correlation between Healthcare and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Trust PR 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 Trust 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 Trust PR 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 Trust i.e., Healthcare Trust and Global Medical go up and down completely randomly.

Pair Corralation between Healthcare Trust and Global Medical

Given the investment horizon of 90 days Healthcare Trust PR is expected to generate 1.31 times more return on investment than Global Medical. However, Healthcare Trust is 1.31 times more volatile than Global Medical REIT. It trades about -0.14 of its potential returns per unit of risk. Global Medical REIT is currently generating about -0.32 per unit of risk. If you would invest  1,565  in Healthcare Trust PR on October 6, 2024 and sell it today you would lose (87.00) from holding Healthcare Trust PR or give up 5.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Healthcare Trust PR  vs.  Global Medical REIT

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust PR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Healthcare Trust and Global Medical

The main advantage of trading using opposite Healthcare Trust and Global Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Trust 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 Trust PR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.