Correlation Between Medical Properties and OFX Group

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

Diversification Opportunities for Medical Properties and OFX Group

-0.21

Correlation Coefficient

Medical Properties  OFX Group

Very good diversification

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

Pair Corralation between Medical Properties and OFX Group

Considering the 90-day investment horizon Medical Properties Trust is expected to generate 1.62 times more return on investment than OFX Group. However, Medical Properties is 1.62 times more volatile than OFX Group Ltd. It trades about 0.28 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.13 per unit of risk. If you would invest  367.00  in Medical Properties Trust on December 28, 2024 and sell it today you would earn a total of  254.00  from holding Medical Properties Trust or generate 69.21% return on investment over 90 days.

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

Medical Properties Trust  vs.  OFX Group Ltd

Medical Properties Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Medical Properties showed solid returns over the last few months and may actually be approaching a breakup point.

OFX Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFX Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Medical Properties and OFX Group

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

The idea behind Medical Properties Trust and OFX Group Ltd 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.