Correlation Between Medical Properties and Chimera Investment

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

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

Diversification Opportunities for Medical Properties and Chimera Investment

0.67

Correlation Coefficient

Medical Properties  Chimera Investment

Poor diversification

The 3 months correlation between Medical and Chimera is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and Medical Properties 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 Medical Properties Trust are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of Medical Properties i.e., Medical Properties and Chimera Investment go up and down completely randomly.

Pair Corralation between Medical Properties and Chimera Investment

Considering the 90-day investment horizon Medical Properties Trust is expected to generate 2.98 times more return on investment than Chimera Investment. However, Medical Properties is 2.98 times more volatile than Chimera Investment. It trades about 0.01 of its potential returns per unit of risk. Chimera Investment is currently generating about -0.01 per unit of risk. If you would invest  449.00  in Medical Properties Trust on September 1, 2024 and sell it today you would lose (10.00) from holding Medical Properties Trust or give up 2.23% of portfolio value over 90 days.

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

Medical Properties Trust  vs.  Chimera Investment

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. In spite of fairly stable basic indicators, Medical Properties is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chimera Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Chimera Investment is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Medical Properties and Chimera Investment

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

The idea behind Medical Properties Trust and Chimera Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.