Correlation Between Vornado Realty and Healthcare Realty

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Can any of the company-specific risk be diversified away by investing in both Vornado Realty and Healthcare Realty 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 Healthcare Realty 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 Healthcare Realty Trust, you can compare the effects of market volatilities on Vornado Realty and Healthcare Realty 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 Healthcare Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vornado Realty and Healthcare Realty.

Diversification Opportunities for Vornado Realty and Healthcare Realty

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vornado and Healthcare is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and Healthcare Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Realty Trust 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 Healthcare Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Realty Trust has no effect on the direction of Vornado Realty i.e., Vornado Realty and Healthcare Realty go up and down completely randomly.

Pair Corralation between Vornado Realty and Healthcare Realty

Considering the 90-day investment horizon Vornado Realty Trust is expected to generate 1.62 times more return on investment than Healthcare Realty. However, Vornado Realty is 1.62 times more volatile than Healthcare Realty Trust. It trades about 0.15 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about 0.14 per unit of risk. If you would invest  2,529  in Vornado Realty Trust on December 29, 2023 and sell it today you would earn a total of  219.00  from holding Vornado Realty Trust or generate 8.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Vornado Realty Trust  vs.  Healthcare Realty Trust

 Performance 
       Timeline  
Vornado Realty Trust 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Vornado Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vornado Realty is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Healthcare Realty Trust 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Healthcare Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vornado Realty and Healthcare Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vornado Realty and Healthcare Realty

The main advantage of trading using opposite Vornado Realty and Healthcare Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty position performs unexpectedly, Healthcare Realty 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 Healthcare Realty will offset losses from the drop in Healthcare Realty's long position.
The idea behind Vornado Realty Trust and Healthcare Realty Trust 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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