Correlation Between Royalty Management and American Healthcare

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

By analyzing existing cross correlation between Royalty Management Holding and American Healthcare REIT,, you can compare the effects of market volatilities on Royalty Management and American Healthcare 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 Royalty Management with a short position of American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalty Management and American Healthcare.

Diversification Opportunities for Royalty Management and American Healthcare

0.38

Correlation Coefficient

Royalty Management  American Healthcare

Weak diversification

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

Pair Corralation between Royalty Management and American Healthcare

Given the investment horizon of 90 days Royalty Management is expected to generate 3.73 times less return on investment than American Healthcare. In addition to that, Royalty Management is 2.24 times more volatile than American Healthcare REIT,. It trades about 0.02 of its total potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.15 per unit of volatility. If you would invest  2,434  in American Healthcare REIT, on September 13, 2024 and sell it today you would earn a total of  405.00  from holding American Healthcare REIT, or generate 16.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Royalty Management Holding  vs.  American Healthcare REIT,

Royalty Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Royalty Management is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

American Healthcare REIT,

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royalty Management and American Healthcare

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

The idea behind Royalty Management Holding and American Healthcare 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.