Correlation Between PEAK Old and Medical Properties

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

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

Diversification Opportunities for PEAK Old and Medical Properties

0.05

Correlation Coefficient

PEAK Old  Medical Properties

Significant diversification

The 3 months correlation between PEAK and Medical is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding PEAK Old and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and PEAK Old 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 PEAK Old are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of PEAK Old i.e., PEAK Old and Medical Properties go up and down completely randomly.

Pair Corralation between PEAK Old and Medical Properties

If you would invest  2,212  in PEAK Old on September 28, 2024 and sell it today you would earn a total of  0.00  from holding PEAK Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.3%
Values	Daily Returns

PEAK Old  vs.  Medical Properties Trust

PEAK Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEAK Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PEAK Old is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with PEAK Old and Medical Properties

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

The idea behind PEAK Old and Medical Properties Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.