Correlation Between Transcontinental and Healthcare Trust

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

By analyzing existing cross correlation between Transcontinental Realty Investors and Healthcare Trust PR, you can compare the effects of market volatilities on Transcontinental and Healthcare Trust 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 Transcontinental with a short position of Healthcare Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcontinental and Healthcare Trust.

Diversification Opportunities for Transcontinental and Healthcare Trust

-0.59

Correlation Coefficient

Transcontinental  Healthcare Trust

Excellent diversification

The 3 months correlation between Transcontinental and Healthcare is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and Healthcare Trust PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Trust and Transcontinental 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 Transcontinental Realty Investors are associated (or correlated) with Healthcare Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Trust has no effect on the direction of Transcontinental i.e., Transcontinental and Healthcare Trust go up and down completely randomly.

Pair Corralation between Transcontinental and Healthcare Trust

Considering the 90-day investment horizon Transcontinental Realty Investors is expected to generate 1.26 times more return on investment than Healthcare Trust. However, Transcontinental is 1.26 times more volatile than Healthcare Trust PR. It trades about 0.04 of its potential returns per unit of risk. Healthcare Trust PR is currently generating about -0.13 per unit of risk. If you would invest  2,890  in Transcontinental Realty Investors on October 1, 2024 and sell it today you would earn a total of  37.00  from holding Transcontinental Realty Investors or generate 1.28% return on investment over 90 days.

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

Transcontinental Realty Invest  vs.  Healthcare Trust PR

Transcontinental Realty

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental Realty Investors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Transcontinental is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust PR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Transcontinental and Healthcare Trust

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

The idea behind Transcontinental Realty Investors and Healthcare Trust PR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.