Correlation Between Vanguard Health and Realty Income
Can any of the company-specific risk be diversified away by investing in both Vanguard Health and Realty Income 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 Vanguard Health and Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Health Care and Realty Income Corp, you can compare the effects of market volatilities on Vanguard Health and Realty Income 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 Vanguard Health with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Health and Realty Income.
Diversification Opportunities for Vanguard Health and Realty Income
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Realty is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Health Care and Realty Income Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty me Corp and Vanguard Health 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 Vanguard Health Care are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty me Corp has no effect on the direction of Vanguard Health i.e., Vanguard Health and Realty Income go up and down completely randomly.
Pair Corralation between Vanguard Health and Realty Income
Considering the 90-day investment horizon Vanguard Health Care is expected to generate 0.51 times more return on investment than Realty Income. However, Vanguard Health Care is 1.95 times less risky than Realty Income. It trades about 0.11 of its potential returns per unit of risk. Realty Income Corp is currently generating about 0.04 per unit of risk. If you would invest 23,055 in Vanguard Health Care on January 18, 2024 and sell it today you would earn a total of 2,326 from holding Vanguard Health Care or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Vanguard Health Care vs. Realty Income Corp
Performance |
| Timeline |
| Vanguard Health Care |
| Realty me Corp |
Vanguard Health and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Health and Realty Income
The main advantage of trading using opposite Vanguard Health and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Health position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Vanguard Health vs. Consumer Staples Select | Vanguard Health vs. Industrial Select Sector | Vanguard Health vs. Consumer Discretionary Select | Vanguard Health vs. Utilities Select Sector |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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