Correlation Between V1TA34 and Healthpeak Properties

Can any of the company-specific risk be diversified away by investing in both V1TA34 and Healthpeak Properties 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 V1TA34 and Healthpeak Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between V1TA34 and Healthpeak Properties, you can compare the effects of market volatilities on V1TA34 and Healthpeak Properties 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 V1TA34 with a short position of Healthpeak Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of V1TA34 and Healthpeak Properties.

Diversification Opportunities for V1TA34 and Healthpeak Properties

0.85

Correlation Coefficient

V1TA34  Healthpeak Properties

Very poor diversification

The 3 months correlation between V1TA34 and Healthpeak is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding V1TA34 and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and V1TA34 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 V1TA34 are associated (or correlated) with Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of V1TA34 i.e., V1TA34 and Healthpeak Properties go up and down completely randomly.

Pair Corralation between V1TA34 and Healthpeak Properties

Assuming the 90 days trading horizon V1TA34 is expected to generate 0.9 times more return on investment than Healthpeak Properties. However, V1TA34 is 1.11 times less risky than Healthpeak Properties. It trades about 0.09 of its potential returns per unit of risk. Healthpeak Properties is currently generating about 0.01 per unit of risk. If you would invest  17,375  in V1TA34 on September 26, 2024 and sell it today you would earn a total of  1,169  from holding V1TA34 or generate 6.73% return on investment over 90 days.

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

V1TA34  vs.  Healthpeak Properties

V1TA34

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in V1TA34 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, V1TA34 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Healthpeak Properties

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Healthpeak Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with V1TA34 and Healthpeak Properties

The main advantage of trading using opposite V1TA34 and Healthpeak Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if V1TA34 position performs unexpectedly, Healthpeak Properties 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 Healthpeak Properties will offset losses from the drop in Healthpeak Properties' long position.

The idea behind V1TA34 and Healthpeak Properties 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .