Correlation Between Global Medical and Global Medical

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

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

Diversification Opportunities for Global Medical and Global Medical

0.12

Correlation Coefficient

Global Medical  Global Medical

Average diversification

The 3 months correlation between Global and Global is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Global Medical REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Medical REIT and Global Medical 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 Global Medical REIT are associated (or correlated) with Global Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Medical REIT has no effect on the direction of Global Medical i.e., Global Medical and Global Medical go up and down completely randomly.

Pair Corralation between Global Medical and Global Medical

Given the investment horizon of 90 days Global Medical is expected to generate 2.15 times less return on investment than Global Medical. In addition to that, Global Medical is 2.52 times more volatile than Global Medical REIT. It trades about 0.01 of its total potential returns per unit of risk. Global Medical REIT is currently generating about 0.05 per unit of volatility. If you would invest  2,150  in Global Medical REIT on September 22, 2024 and sell it today you would earn a total of  335.00  from holding Global Medical REIT or generate 15.58% return on investment over 90 days.

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

Global Medical REIT  vs.  Global Medical REIT

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Global Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Medical and Global Medical

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

The idea behind Global Medical REIT and Global Medical REIT 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.