Correlation Between Target Healthcare and Ecclesiastical Insurance

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

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

Diversification Opportunities for Target Healthcare and Ecclesiastical Insurance

0.88

Correlation Coefficient

Target Healthcare  Ecclesiastical Insurance

Very poor diversification

The 3 months correlation between Target and Ecclesiastical is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance and Target Healthcare 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 Target Healthcare REIT are associated (or correlated) with Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of Target Healthcare i.e., Target Healthcare and Ecclesiastical Insurance go up and down completely randomly.

Pair Corralation between Target Healthcare and Ecclesiastical Insurance

Assuming the 90 days trading horizon Target Healthcare REIT is expected to generate 1.47 times more return on investment than Ecclesiastical Insurance. However, Target Healthcare is 1.47 times more volatile than Ecclesiastical Insurance Office. It trades about 0.12 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about 0.1 per unit of risk. If you would invest  8,310  in Target Healthcare REIT on December 26, 2024 and sell it today you would earn a total of  930.00  from holding Target Healthcare REIT or generate 11.19% return on investment over 90 days.

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

Target Healthcare REIT  vs.  Ecclesiastical Insurance Offic

Target Healthcare REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target Healthcare REIT are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Target Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ecclesiastical Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecclesiastical Insurance Office are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ecclesiastical Insurance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Target Healthcare and Ecclesiastical Insurance

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

The idea behind Target Healthcare REIT and Ecclesiastical Insurance Office 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.