Correlation Between Welltower and PotlatchDeltic Corp

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

By analyzing existing cross correlation between Welltower and PotlatchDeltic Corp, you can compare the effects of market volatilities on Welltower and PotlatchDeltic Corp 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 Welltower with a short position of PotlatchDeltic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and PotlatchDeltic Corp.

Diversification Opportunities for Welltower and PotlatchDeltic Corp

0.8

Correlation Coefficient

Welltower  PotlatchDeltic Corp

Very poor diversification

The 3 months correlation between Welltower and PotlatchDeltic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Welltower and PotlatchDeltic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PotlatchDeltic Corp and Welltower 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 Welltower are associated (or correlated) with PotlatchDeltic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PotlatchDeltic Corp has no effect on the direction of Welltower i.e., Welltower and PotlatchDeltic Corp go up and down completely randomly.

Pair Corralation between Welltower and PotlatchDeltic Corp

Given the investment horizon of 90 days Welltower is expected to generate 0.85 times more return on investment than PotlatchDeltic Corp. However, Welltower is 1.18 times less risky than PotlatchDeltic Corp. It trades about 0.12 of its potential returns per unit of risk. PotlatchDeltic Corp is currently generating about 0.04 per unit of risk. If you would invest  13,868  in Welltower on November 27, 2024 and sell it today you would earn a total of  1,306  from holding Welltower or generate 9.42% return on investment over 90 days.

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

Welltower  vs.  PotlatchDeltic Corp

Welltower

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Welltower may actually be approaching a critical reversion point that can send shares even higher in March 2025.

PotlatchDeltic Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PotlatchDeltic Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, PotlatchDeltic Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Welltower and PotlatchDeltic Corp

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

The idea behind Welltower and PotlatchDeltic Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.