Correlation Between Medical Properties and Phibro Animal

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

Diversification Opportunities for Medical Properties and Phibro Animal

0.21

Correlation Coefficient

Medical Properties  Phibro Animal

Modest diversification

The 3 months correlation between Medical and Phibro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Medical Properties i.e., Medical Properties and Phibro Animal go up and down completely randomly.

Pair Corralation between Medical Properties and Phibro Animal

Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the Phibro Animal. In addition to that, Medical Properties is 1.41 times more volatile than Phibro Animal Health. It trades about -0.02 of its total potential returns per unit of risk. Phibro Animal Health is currently generating about 0.04 per unit of volatility. If you would invest  1,372  in Phibro Animal Health on October 25, 2024 and sell it today you would earn a total of  708.00  from holding Phibro Animal Health or generate 51.6% return on investment over 90 days.

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

Medical Properties Trust  vs.  Phibro Animal Health

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. In spite of comparatively stable basic indicators, Medical Properties is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Phibro Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phibro Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phibro Animal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Medical Properties and Phibro Animal

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

The idea behind Medical Properties Trust and Phibro Animal Health 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.