Correlation Between Welltower and Sa Real

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

By analyzing existing cross correlation between Welltower and Sa Real Estate, you can compare the effects of market volatilities on Welltower and Sa Real 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 Sa Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welltower and Sa Real.

Diversification Opportunities for Welltower and Sa Real

0.36

Correlation Coefficient

Welltower  Sa Real

Weak diversification

The 3 months correlation between Welltower and SAREX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Welltower and Sa Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Real Estate 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 Sa Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Real Estate has no effect on the direction of Welltower i.e., Welltower and Sa Real go up and down completely randomly.

Pair Corralation between Welltower and Sa Real

Given the investment horizon of 90 days Welltower is expected to generate 1.22 times more return on investment than Sa Real. However, Welltower is 1.22 times more volatile than Sa Real Estate. It trades about 0.22 of its potential returns per unit of risk. Sa Real Estate is currently generating about -0.03 per unit of risk. If you would invest  13,226  in Welltower on December 3, 2024 and sell it today you would earn a total of  2,460  from holding Welltower or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Welltower  vs.  Sa Real Estate

Welltower

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Welltower disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sa Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sa Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sa Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Welltower and Sa Real

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

The idea behind Welltower and Sa Real Estate 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.