Correlation Between Healthpeak Properties and Meta Platforms

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

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

Diversification Opportunities for Healthpeak Properties and Meta Platforms

0.61

Correlation Coefficient

Healthpeak Properties  Meta Platforms

Poor diversification

The 3 months correlation between Healthpeak and Meta is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Healthpeak 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 Healthpeak Properties are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and Meta Platforms go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Meta Platforms

Assuming the 90 days trading horizon Healthpeak Properties is expected to generate 3.07 times less return on investment than Meta Platforms. But when comparing it to its historical volatility, Healthpeak Properties is 1.95 times less risky than Meta Platforms. It trades about 0.13 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  10,310  in Meta Platforms on September 11, 2024 and sell it today you would earn a total of  2,953  from holding Meta Platforms or generate 28.64% return on investment over 90 days.

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

Healthpeak Properties  vs.  Meta Platforms

Healthpeak Properties

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthpeak Properties are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Healthpeak Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Meta Platforms

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthpeak Properties and Meta Platforms

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

The idea behind Healthpeak Properties and Meta Platforms 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.