Correlation Between American Healthcare and Terreno Realty

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

Diversification Opportunities for American Healthcare and Terreno Realty

-0.6

Correlation Coefficient

American Healthcare  Terreno Realty

Excellent diversification

The 3 months correlation between American and Terreno is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Terreno Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terreno 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 Terreno Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terreno Realty has no effect on the direction of American Healthcare i.e., American Healthcare and Terreno Realty go up and down completely randomly.

Pair Corralation between American Healthcare and Terreno Realty

Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 1.04 times more return on investment than Terreno Realty. However, American Healthcare is 1.04 times more volatile than Terreno Realty. It trades about 0.09 of its potential returns per unit of risk. Terreno Realty is currently generating about -0.1 per unit of risk. If you would invest  2,610  in American Healthcare REIT, on September 29, 2024 and sell it today you would earn a total of  238.00  from holding American Healthcare REIT, or generate 9.12% return on investment over 90 days.

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

American Healthcare REIT,  vs.  Terreno Realty

American Healthcare REIT,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical indicators, American Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Terreno Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terreno Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with American Healthcare and Terreno Realty

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

The idea behind American Healthcare REIT, and Terreno 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.