Correlation Between Visa and HEALTHPEAK

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

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

Diversification Opportunities for Visa and HEALTHPEAK

-0.4

Correlation Coefficient

Visa  HEALTHPEAK

Very good diversification

The 3 months correlation between Visa and HEALTHPEAK is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and HEALTHPEAK go up and down completely randomly.

Pair Corralation between Visa and HEALTHPEAK

Taking into account the 90-day investment horizon Visa is expected to generate 62.12 times less return on investment than HEALTHPEAK. But when comparing it to its historical volatility, Visa Class A is 70.25 times less risky than HEALTHPEAK. It trades about 0.07 of its potential returns per unit of risk. HEALTHPEAK PROPERTIES INC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,876  in HEALTHPEAK PROPERTIES INC on October 13, 2024 and sell it today you would lose (110.00) from holding HEALTHPEAK PROPERTIES INC or give up 1.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.05%
Values	Daily Returns

Visa Class A  vs.  HEALTHPEAK PROPERTIES INC

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and HEALTHPEAK

The main advantage of trading using opposite Visa and HEALTHPEAK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.