Correlation Between Invesco Real and Healthcare Realty

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

By analyzing existing cross correlation between Invesco Real Estate and Healthcare Realty Trust, you can compare the effects of market volatilities on Invesco Real and Healthcare 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 Invesco Real with a short position of Healthcare Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Real and Healthcare Realty.

Diversification Opportunities for Invesco Real and Healthcare Realty

0.55

Correlation Coefficient

Invesco Real  Healthcare Realty

Very weak diversification

The 3 months correlation between Invesco and Healthcare is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Real Estate and Healthcare Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Realty Trust and Invesco Real 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 Invesco Real Estate are associated (or correlated) with Healthcare Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Realty Trust has no effect on the direction of Invesco Real i.e., Invesco Real and Healthcare Realty go up and down completely randomly.

Pair Corralation between Invesco Real and Healthcare Realty

Assuming the 90 days horizon Invesco Real Estate is expected to under-perform the Healthcare Realty. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Real Estate is 1.57 times less risky than Healthcare Realty. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Healthcare Realty Trust is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,763  in Healthcare Realty Trust on September 20, 2024 and sell it today you would lose (93.00) from holding Healthcare Realty Trust or give up 5.28% of portfolio value over 90 days.

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

Invesco Real Estate  vs.  Healthcare Realty Trust

Invesco Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Healthcare Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Healthcare Realty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Invesco Real and Healthcare Realty

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

The idea behind Invesco Real Estate and Healthcare Realty Trust 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .