Correlation Between Ventas and Healthcare Realty

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

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

Diversification Opportunities for Ventas and Healthcare Realty

0.9

Correlation Coefficient

Ventas  Healthcare Realty

Almost no diversification

The 3 months correlation between Ventas and Healthcare is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc 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 Ventas 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 Ventas Inc 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 Ventas i.e., Ventas and Healthcare Realty go up and down completely randomly.

Pair Corralation between Ventas and Healthcare Realty

Considering the 90-day investment horizon Ventas is expected to generate 1.32 times less return on investment than Healthcare Realty. But when comparing it to its historical volatility, Ventas Inc is 1.06 times less risky than Healthcare Realty. It trades about 0.01 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,370  in Healthcare Realty Trust on January 20, 2024 and sell it today you would earn a total of  3.00  from holding Healthcare Realty Trust or generate 0.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.67%
Values	Daily Returns

Ventas Inc  vs.  Healthcare Realty Trust

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ventas Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Healthcare Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ventas and Healthcare Realty

The main advantage of trading using opposite Ventas and Healthcare Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ventas 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 Ventas Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..