Correlation Between Ventas and Welltower
Can any of the company-specific risk be diversified away by investing in both Ventas and Welltower 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 Ventas and Welltower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ventas Inc and Welltower, you can compare the effects of market volatilities on Ventas and Welltower 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 Ventas with a short position of Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ventas and Welltower.
Diversification Opportunities for Ventas and Welltower
Excellent diversification
The 3 months correlation between Ventas and Welltower is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower and Ventas 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 Ventas Inc are associated (or correlated) with Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Ventas i.e., Ventas and Welltower go up and down completely randomly.
Pair Corralation between Ventas and Welltower
Considering the 90-day investment horizon Ventas Inc is expected to generate 1.43 times more return on investment than Welltower. However, Ventas is 1.43 times more volatile than Welltower. It trades about 0.08 of its potential returns per unit of risk. Welltower is currently generating about 0.02 per unit of risk. If you would invest 4,221 in Ventas Inc on January 23, 2024 and sell it today you would earn a total of 92.00 from holding Ventas Inc or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ventas Inc vs. Welltower
Performance |
| Timeline |
| Ventas Inc |
| Welltower |
Ventas and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ventas and Welltower
The main advantage of trading using opposite Ventas and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ventas position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower's long position.| Ventas vs. Healthcare Realty Trust | Ventas vs. Healthpeak Properties | Ventas vs. Universal Health Realty | Ventas vs. Global Medical REIT |
| Welltower vs. Healthcare Realty Trust | Welltower vs. Sabra Healthcare REIT | Welltower vs. National Health Investors | Welltower vs. Global Medical REIT |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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