Correlation Between Healthcare Trust and New York

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

Diversification Opportunities for Healthcare Trust and New York

0.22

Correlation Coefficient

Healthcare Trust  New York

Modest diversification

The 3 months correlation between Healthcare and New is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Trust PR and New York City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York City 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York City has no effect on the direction of Healthcare Trust i.e., Healthcare Trust and New York go up and down completely randomly.

Pair Corralation between Healthcare Trust and New York

Given the investment horizon of 90 days Healthcare Trust PR is expected to under-perform the New York. But the stock apears to be less risky and, when comparing its historical volatility, Healthcare Trust PR is 1.29 times less risky than New York. The stock trades about -0.14 of its potential returns per unit of risk. The New York City is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  841.00  in New York City on October 6, 2024 and sell it today you would earn a total of  58.00  from holding New York City or generate 6.9% return on investment over 90 days.

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

Healthcare Trust PR  vs.  New York City

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.

New York City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, New York is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Healthcare Trust and New York

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

The idea behind Healthcare Trust PR and New York City 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.