Correlation Between Hersha Hospitality and Healthcare Realty
Can any of the company-specific risk be diversified away by investing in both Hersha Hospitality 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 Hersha Hospitality and Healthcare Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hersha Hospitality Trust and Healthcare Realty Trust, you can compare the effects of market volatilities on Hersha Hospitality 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 Hersha Hospitality with a short position of Healthcare Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hersha Hospitality and Healthcare Realty.
Diversification Opportunities for Hersha Hospitality and Healthcare Realty
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hersha and Healthcare is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hersha Hospitality 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 Hersha Hospitality 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 Hersha Hospitality 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 Hersha Hospitality i.e., Hersha Hospitality and Healthcare Realty go up and down completely randomly.
Pair Corralation between Hersha Hospitality and Healthcare Realty
Allowing for the 90-day total investment horizon Hersha Hospitality Trust is expected to generate 2.07 times more return on investment than Healthcare Realty. However, Hersha Hospitality is 2.07 times more volatile than Healthcare Realty Trust. It trades about 0.03 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about -0.05 per unit of risk. If you would invest 757.00 in Hersha Hospitality Trust on December 29, 2023 and sell it today you would earn a total of 242.00 from holding Hersha Hospitality Trust or generate 31.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 83.4% |
Values | Daily Returns |
Hersha Hospitality Trust vs. Healthcare Realty Trust
Performance |
Timeline |
Hersha Hospitality Trust |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Healthcare Realty Trust |
Hersha Hospitality and Healthcare Realty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hersha Hospitality and Healthcare Realty
The main advantage of trading using opposite Hersha Hospitality and Healthcare Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hersha Hospitality 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.Hersha Hospitality vs. Virco Manufacturing | Hersha Hospitality vs. Merit Medical Systems | Hersha Hospitality vs. Ecolab Inc | Hersha Hospitality vs. HNI Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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