Correlation Between Medical Properties and Kering SA

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

Diversification Opportunities for Medical Properties and Kering SA

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Medical and Kering is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and Medical Properties 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 Medical Properties Trust are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Medical Properties i.e., Medical Properties and Kering SA go up and down completely randomly.

Pair Corralation between Medical Properties and Kering SA

Considering the 90-day investment horizon Medical Properties Trust is expected to generate 1.93 times more return on investment than Kering SA. However, Medical Properties is 1.93 times more volatile than Kering SA. It trades about 0.14 of its potential returns per unit of risk. Kering SA is currently generating about -0.31 per unit of risk. If you would invest  417.00  in Medical Properties Trust on December 29, 2023 and sell it today you would earn a total of  55.00  from holding Medical Properties Trust or generate 13.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Medical Properties Trust  vs.  Kering SA

 Performance 
       Timeline  
Medical Properties Trust 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Medical Properties may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Kering SA 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Kering SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Medical Properties and Kering SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Medical Properties and Kering SA

The main advantage of trading using opposite Medical Properties and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.
The idea behind Medical Properties Trust and Kering SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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