Correlation Between Schwab Broad and HEALTHPEAK

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

By analyzing existing cross correlation between Schwab Broad Market and HEALTHPEAK PROPERTIES INC, you can compare the effects of market volatilities on Schwab Broad and HEALTHPEAK 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 Schwab Broad with a short position of HEALTHPEAK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Broad and HEALTHPEAK.

Diversification Opportunities for Schwab Broad and HEALTHPEAK

-0.5

Correlation Coefficient

Schwab Broad  HEALTHPEAK

Very good diversification

The 3 months correlation between Schwab and HEALTHPEAK is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Broad Market and HEALTHPEAK PROPERTIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEALTHPEAK PROPERTIES INC and Schwab Broad 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 Schwab Broad Market are associated (or correlated) with HEALTHPEAK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEALTHPEAK PROPERTIES INC has no effect on the direction of Schwab Broad i.e., Schwab Broad and HEALTHPEAK go up and down completely randomly.

Pair Corralation between Schwab Broad and HEALTHPEAK

Given the investment horizon of 90 days Schwab Broad Market is expected to generate 1.37 times more return on investment than HEALTHPEAK. However, Schwab Broad is 1.37 times more volatile than HEALTHPEAK PROPERTIES INC. It trades about 0.09 of its potential returns per unit of risk. HEALTHPEAK PROPERTIES INC is currently generating about -0.04 per unit of risk. If you would invest  2,193  in Schwab Broad Market on September 25, 2024 and sell it today you would earn a total of  97.00  from holding Schwab Broad Market or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Schwab Broad Market  vs.  HEALTHPEAK PROPERTIES INC

Schwab Broad Market

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Broad Market are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Schwab Broad is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HEALTHPEAK PROPERTIES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEALTHPEAK PROPERTIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HEALTHPEAK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schwab Broad and HEALTHPEAK

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

The idea behind Schwab Broad Market and HEALTHPEAK PROPERTIES INC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.