Correlation Between Medical Properties and Energisa

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

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

Diversification Opportunities for Medical Properties and Energisa

0.73

Correlation Coefficient

Medical Properties  Energisa

Poor diversification

The 3 months correlation between Medical and Energisa is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust, and Energisa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisa SA and Medical Properties 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 Medical Properties Trust, are associated (or correlated) with Energisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisa SA has no effect on the direction of Medical Properties i.e., Medical Properties and Energisa go up and down completely randomly.

Pair Corralation between Medical Properties and Energisa

Assuming the 90 days trading horizon Medical Properties Trust, is expected to generate 3.12 times more return on investment than Energisa. However, Medical Properties is 3.12 times more volatile than Energisa SA. It trades about -0.02 of its potential returns per unit of risk. Energisa SA is currently generating about -0.14 per unit of risk. If you would invest  1,423  in Medical Properties Trust, on October 9, 2024 and sell it today you would lose (197.00) from holding Medical Properties Trust, or give up 13.84% of portfolio value over 90 days.

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

Medical Properties Trust,  vs.  Energisa SA

Medical Properties Trust,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Medical Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Energisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Medical Properties and Energisa

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

The idea behind Medical Properties Trust, and Energisa SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.