Correlation Between American Healthcare and Clipper Realty

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

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

Diversification Opportunities for American Healthcare and Clipper Realty

-0.42

Correlation Coefficient

American Healthcare  Clipper Realty

Very good diversification

The 3 months correlation between American and Clipper is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Clipper Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Realty and American Healthcare 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 American Healthcare REIT, are associated (or correlated) with Clipper Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Realty has no effect on the direction of American Healthcare i.e., American Healthcare and Clipper Realty go up and down completely randomly.

Pair Corralation between American Healthcare and Clipper Realty

Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 0.5 times more return on investment than Clipper Realty. However, American Healthcare REIT, is 2.02 times less risky than Clipper Realty. It trades about 0.15 of its potential returns per unit of risk. Clipper Realty is currently generating about -0.06 per unit of risk. If you would invest  2,434  in American Healthcare REIT, on September 13, 2024 and sell it today you would earn a total of  405.00  from holding American Healthcare REIT, or generate 16.64% return on investment over 90 days.

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

American Healthcare REIT,  vs.  Clipper Realty

American Healthcare REIT,

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Clipper Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clipper Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with American Healthcare and Clipper Realty

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

The idea behind American Healthcare REIT, and Clipper Realty 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 Commodity Directory module to find actively traded commodities issued by global exchanges.