Correlation Between Superior Plus and Medical Properties

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

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

Diversification Opportunities for Superior Plus and Medical Properties

0.7

Correlation Coefficient

Superior Plus  Medical Properties

Poor diversification

The 3 months correlation between Superior and Medical is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Superior Plus i.e., Superior Plus and Medical Properties go up and down completely randomly.

Pair Corralation between Superior Plus and Medical Properties

Assuming the 90 days horizon Superior Plus Corp is expected to generate 0.47 times more return on investment than Medical Properties. However, Superior Plus Corp is 2.13 times less risky than Medical Properties. It trades about -0.01 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.01 per unit of risk. If you would invest  565.00  in Superior Plus Corp on September 12, 2024 and sell it today you would lose (129.00) from holding Superior Plus Corp or give up 22.83% of portfolio value over 90 days.

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

Superior Plus Corp  vs.  Medical Properties Trust

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Superior Plus and Medical Properties

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

The idea behind Superior Plus Corp and Medical Properties 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.