Correlation Between Vornado Realty and American Healthcare

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

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

Diversification Opportunities for Vornado Realty and American Healthcare

0.62

Correlation Coefficient

Vornado Realty  American Healthcare

Poor diversification

The 3 months correlation between Vornado and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust 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 Vornado Realty 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 Vornado Realty Trust 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 Vornado Realty i.e., Vornado Realty and American Healthcare go up and down completely randomly.

Pair Corralation between Vornado Realty and American Healthcare

Considering the 90-day investment horizon Vornado Realty Trust is expected to generate 0.96 times more return on investment than American Healthcare. However, Vornado Realty Trust is 1.04 times less risky than American Healthcare. It trades about 0.17 of its potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.16 per unit of risk. If you would invest  3,748  in Vornado Realty Trust on September 14, 2024 and sell it today you would earn a total of  672.00  from holding Vornado Realty Trust or generate 17.93% return on investment over 90 days.

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

Vornado Realty Trust  vs.  American Healthcare REIT,

Vornado Realty Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vornado Realty Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vornado Realty displayed solid returns over the last few months and may actually be approaching a breakup point.

American Healthcare REIT,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 12 (%) 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 Vornado Realty and American Healthcare

The main advantage of trading using opposite Vornado Realty and American Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty 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 Vornado Realty Trust 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.