Correlation Between Healthcare Realty and Centerspace

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

0.82

Correlation Coefficient

Healthcare Realty  Centerspace

Very poor diversification

The 3 months correlation between Healthcare and Centerspace is 0.82. 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 Trust is expected to generate 1.06 times more return on investment than Centerspace. However, Healthcare Realty is 1.06 times more volatile than Centerspace. It trades about 0.15 of its potential returns per unit of risk. Centerspace is currently generating about 0.15 per unit of risk. If you would invest  1,594  in Healthcare Realty Trust on June 2, 2024 and sell it today you would earn a total of  186.00  from holding Healthcare Realty Trust or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Healthcare Realty Trust  vs.  Centerspace

Healthcare Realty Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Realty Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Healthcare Realty may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Centerspace

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centerspace are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Centerspace may actually be approaching a critical reversion point that can send shares even higher in October 2024.

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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..