Correlation Between Realty Income and Healthcare Realty

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Healthcare Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Healthcare Realty Trust, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Healthcare Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Healthcare Realty.

Diversification Opportunities for Realty Income and Healthcare Realty

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Realty and Healthcare is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income 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 Realty Income 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 Realty Income 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 Realty Income i.e., Realty Income and Healthcare Realty go up and down completely randomly.

Pair Corralation between Realty Income and Healthcare Realty

Taking into account the 90-day investment horizon Realty Income is expected to generate 0.8 times more return on investment than Healthcare Realty. However, Realty Income is 1.24 times less risky than Healthcare Realty. It trades about -0.08 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about -0.15 per unit of risk. If you would invest  6,260  in Realty Income on July 10, 2024 and sell it today you would lose (93.00) from holding Realty Income or give up 1.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Realty Income  vs.  Healthcare Realty Trust

 Performance 
       Timeline  
Realty Income 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income displayed solid returns over the last few months and may actually be approaching a breakup point.
Healthcare Realty Trust 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Realty Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Healthcare Realty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Realty Income and Healthcare Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Realty Income and Healthcare Realty

The main advantage of trading using opposite Realty Income and Healthcare Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.
The idea behind Realty Income and Healthcare Realty Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities