Correlation Between Marcus Millichap and CareTrust REIT

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Can any of the company-specific risk be diversified away by investing in both Marcus Millichap and CareTrust REIT 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 Marcus Millichap and CareTrust REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marcus Millichap and CareTrust REIT, you can compare the effects of market volatilities on Marcus Millichap and CareTrust REIT 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 Marcus Millichap with a short position of CareTrust REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcus Millichap and CareTrust REIT.

Diversification Opportunities for Marcus Millichap and CareTrust REIT

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Marcus and CareTrust is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Marcus Millichap and CareTrust REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareTrust REIT and Marcus Millichap 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 Marcus Millichap are associated (or correlated) with CareTrust REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareTrust REIT has no effect on the direction of Marcus Millichap i.e., Marcus Millichap and CareTrust REIT go up and down completely randomly.

Pair Corralation between Marcus Millichap and CareTrust REIT

Considering the 90-day investment horizon Marcus Millichap is expected to under-perform the CareTrust REIT. In addition to that, Marcus Millichap is 1.29 times more volatile than CareTrust REIT. It trades about -0.38 of its total potential returns per unit of risk. CareTrust REIT is currently generating about -0.44 per unit of volatility. If you would invest  3,003  in CareTrust REIT on September 24, 2024 and sell it today you would lose (290.00) from holding CareTrust REIT or give up 9.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Marcus Millichap  vs.  CareTrust REIT

 Performance 
       Timeline  
Marcus Millichap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Marcus Millichap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Marcus Millichap is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
CareTrust REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CareTrust REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Marcus Millichap and CareTrust REIT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marcus Millichap and CareTrust REIT

The main advantage of trading using opposite Marcus Millichap and CareTrust REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcus Millichap position performs unexpectedly, CareTrust REIT 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 CareTrust REIT will offset losses from the drop in CareTrust REIT's long position.
The idea behind Marcus Millichap and CareTrust 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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