Correlation Between Marcus Millichap and Healthcare Trust

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

By analyzing existing cross correlation between Marcus Millichap and Healthcare Trust PR, you can compare the effects of market volatilities on Marcus Millichap and Healthcare Trust 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 Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcus Millichap and Healthcare Trust.

Diversification Opportunities for Marcus Millichap and Healthcare Trust

0.03

Correlation Coefficient

Marcus Millichap  Healthcare Trust

Significant diversification

The 3 months correlation between Marcus and Healthcare is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Marcus Millichap and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust 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 Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Marcus Millichap i.e., Marcus Millichap and Healthcare Trust go up and down completely randomly.

Pair Corralation between Marcus Millichap and Healthcare Trust

Considering the 90-day investment horizon Marcus Millichap is expected to under-perform the Healthcare Trust. But the stock apears to be less risky and, when comparing its historical volatility, Marcus Millichap is 1.27 times less risky than Healthcare Trust. The stock trades about -0.25 of its potential returns per unit of risk. The Healthcare Trust PR is currently generating about -0.14 of returns per unit of risk over similar time horizon. 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	Insignificant
Accuracy	95.0%
Values	Daily Returns

Marcus Millichap  vs.  Healthcare Trust PR

Marcus Millichap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus Millichap are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, Marcus Millichap is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Marcus Millichap and Healthcare Trust

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

The idea behind Marcus Millichap and Healthcare Trust PR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.