Correlation Between Healthpeak Properties and Alphabet

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

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

Diversification Opportunities for Healthpeak Properties and Alphabet

0.38

Correlation Coefficient

Healthpeak Properties  Alphabet

Weak diversification

The 3 months correlation between Healthpeak and Alphabet is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet and Healthpeak 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 Healthpeak Properties are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and Alphabet go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Alphabet

Assuming the 90 days trading horizon Healthpeak Properties is expected to generate 12.6 times less return on investment than Alphabet. But when comparing it to its historical volatility, Healthpeak Properties is 1.38 times less risky than Alphabet. It trades about 0.03 of its potential returns per unit of risk. Alphabet is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,634  in Alphabet on October 8, 2024 and sell it today you would earn a total of  2,426  from holding Alphabet or generate 31.78% return on investment over 90 days.

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

Healthpeak Properties  vs.  Alphabet

Healthpeak Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Healthpeak Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Healthpeak Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alphabet

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Alphabet sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthpeak Properties and Alphabet

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

The idea behind Healthpeak Properties and Alphabet 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.