Correlation Between Target Healthcare and Bellevue Healthcare

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

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

Diversification Opportunities for Target Healthcare and Bellevue Healthcare

0.72

Correlation Coefficient

Target Healthcare  Bellevue Healthcare

Poor diversification

The 3 months correlation between Target and Bellevue is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Target Healthcare REIT and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare Trust and Target 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 Target Healthcare REIT are associated (or correlated) with Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Target Healthcare i.e., Target Healthcare and Bellevue Healthcare go up and down completely randomly.

Pair Corralation between Target Healthcare and Bellevue Healthcare

Assuming the 90 days trading horizon Target Healthcare REIT is expected to generate 1.04 times more return on investment than Bellevue Healthcare. However, Target Healthcare is 1.04 times more volatile than Bellevue Healthcare Trust. It trades about -0.1 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about -0.13 per unit of risk. If you would invest  8,883  in Target Healthcare REIT on September 21, 2024 and sell it today you would lose (663.00) from holding Target Healthcare REIT or give up 7.46% of portfolio value over 90 days.

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

Target Healthcare REIT  vs.  Bellevue Healthcare Trust

Target Healthcare REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Healthcare REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Target Healthcare and Bellevue Healthcare

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

The idea behind Target Healthcare REIT and Bellevue Healthcare 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.