Correlation Between Ventas and Welltower

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

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

Diversification Opportunities for Ventas and Welltower

0.49

Correlation Coefficient

Ventas  Welltower

Very weak diversification

The 3 months correlation between Ventas and Welltower is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower and Ventas 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 Ventas Inc are associated (or correlated) with Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Ventas i.e., Ventas and Welltower go up and down completely randomly.

Pair Corralation between Ventas and Welltower

Considering the 90-day investment horizon Ventas Inc is expected to under-perform the Welltower. But the stock apears to be less risky and, when comparing its historical volatility, Ventas Inc is 1.14 times less risky than Welltower. The stock trades about -0.11 of its potential returns per unit of risk. The Welltower is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  12,796  in Welltower on September 23, 2024 and sell it today you would lose (332.00) from holding Welltower or give up 2.59% of portfolio value over 90 days.

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

Ventas Inc  vs.  Welltower

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ventas Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Welltower

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welltower has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Welltower is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ventas and Welltower

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

The idea behind Ventas Inc and Welltower 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.