Correlation Between Healthcare Trust and Welltower

Can any of the company-specific risk be diversified away by investing in both Healthcare Trust 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 Healthcare Trust and Welltower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Healthcare Trust and Welltower, you can compare the effects of market volatilities on Healthcare Trust 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 Healthcare Trust with a short position of Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Trust and Welltower.

Diversification Opportunities for Healthcare Trust and Welltower

0.0

Correlation Coefficient

Healthcare Trust  Welltower

Pay attention - limited upside

The 3 months correlation between Healthcare and Welltower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Trust and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower and Healthcare Trust 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 Trust 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 Healthcare Trust i.e., Healthcare Trust and Welltower go up and down completely randomly.

Pair Corralation between Healthcare Trust and Welltower

Considering the 90-day investment horizon Healthcare Trust is expected to generate 0.99 times more return on investment than Welltower. However, Healthcare Trust is 1.01 times less risky than Welltower. It trades about 0.09 of its potential returns per unit of risk. Welltower is currently generating about 0.02 per unit of risk. If you would invest  2,468  in Healthcare Trust on January 20, 2024 and sell it today you would earn a total of  199.00  from holding Healthcare Trust or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	11.79%
Values	Daily Returns

Healthcare Trust  vs.  Welltower

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Healthcare Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Welltower

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Welltower is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Healthcare Trust and Welltower

The main advantage of trading using opposite Healthcare Trust and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Trust 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.

The idea behind Healthcare Trust and Welltower 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.