Correlation Between One Liberty and Community Healthcare

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

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

Diversification Opportunities for One Liberty and Community Healthcare

-0.67

Correlation Coefficient

One Liberty  Community Healthcare

Excellent diversification

The 3 months correlation between One and Community is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties and Community Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Healthcare and One Liberty 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 One Liberty Properties are associated (or correlated) with Community Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Healthcare has no effect on the direction of One Liberty i.e., One Liberty and Community Healthcare go up and down completely randomly.

Pair Corralation between One Liberty and Community Healthcare

Considering the 90-day investment horizon One Liberty Properties is expected to generate 0.99 times more return on investment than Community Healthcare. However, One Liberty Properties is 1.01 times less risky than Community Healthcare. It trades about 0.02 of its potential returns per unit of risk. Community Healthcare Trust is currently generating about -0.03 per unit of risk. If you would invest  2,145  in One Liberty Properties on March 2, 2024 and sell it today you would earn a total of  187.00  from holding One Liberty Properties or generate 8.72% return on investment over 90 days.

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

One Liberty Properties  vs.  Community Healthcare Trust

One Liberty Properties

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent essential indicators, One Liberty reported solid returns over the last few months and may actually be approaching a breakup point.

Community Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with One Liberty and Community Healthcare

The main advantage of trading using opposite One Liberty and Community Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Liberty position performs unexpectedly, Community Healthcare 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 Community Healthcare will offset losses from the drop in Community Healthcare's long position.

The idea behind One Liberty Properties and Community Healthcare 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.