Correlation Between American Healthcare and Hawkins

Can any of the company-specific risk be diversified away by investing in both American Healthcare and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on American Healthcare and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Hawkins.

Diversification Opportunities for American Healthcare and Hawkins

0.46

Correlation Coefficient

American Healthcare  Hawkins

Very weak diversification

The 3 months correlation between American and Hawkins is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of American Healthcare i.e., American Healthcare and Hawkins go up and down completely randomly.

Pair Corralation between American Healthcare and Hawkins

Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 0.64 times more return on investment than Hawkins. However, American Healthcare REIT, is 1.55 times less risky than Hawkins. It trades about 0.12 of its potential returns per unit of risk. Hawkins is currently generating about 0.04 per unit of risk. If you would invest  2,516  in American Healthcare REIT, on September 19, 2024 and sell it today you would earn a total of  319.00  from holding American Healthcare REIT, or generate 12.68% return on investment over 90 days.

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

American Healthcare REIT,  vs.  Hawkins

American Healthcare REIT,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Hawkins

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with American Healthcare and Hawkins

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

The idea behind American Healthcare REIT, and Hawkins 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.