Correlation Between Healthcare Realty and Centerspace

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Can any of the company-specific risk be diversified away by investing in both Healthcare Realty and Centerspace 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 Healthcare Realty and Centerspace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Healthcare Realty Trust and Centerspace, you can compare the effects of market volatilities on Healthcare Realty and Centerspace 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 Healthcare Realty with a short position of Centerspace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Realty and Centerspace.

Diversification Opportunities for Healthcare Realty and Centerspace

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Healthcare and Centerspace is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust and Centerspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerspace and Healthcare 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 Healthcare Realty Trust are associated (or correlated) with Centerspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerspace has no effect on the direction of Healthcare Realty i.e., Healthcare Realty and Centerspace go up and down completely randomly.

Pair Corralation between Healthcare Realty and Centerspace

Allowing for the 90-day total investment horizon Healthcare Realty is expected to generate 13.07 times less return on investment than Centerspace. But when comparing it to its historical volatility, Healthcare Realty Trust is 8.87 times less risky than Centerspace. It trades about 0.04 of its potential returns per unit of risk. Centerspace is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,253  in Centerspace on February 26, 2024 and sell it today you would earn a total of  1,521  from holding Centerspace or generate 28.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Healthcare Realty Trust  vs.  Centerspace

 Performance 
       Timeline  
Healthcare Realty Trust 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Realty Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Healthcare Realty reported solid returns over the last few months and may actually be approaching a breakup point.
Centerspace 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Centerspace are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Centerspace reported solid returns over the last few months and may actually be approaching a breakup point.

Healthcare Realty and Centerspace Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Healthcare Realty and Centerspace

The main advantage of trading using opposite Healthcare Realty and Centerspace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty position performs unexpectedly, Centerspace 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 Centerspace will offset losses from the drop in Centerspace's long position.
The idea behind Healthcare Realty Trust and Centerspace 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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