Correlation Between Diversified Healthcare and Five Star
Can any of the company-specific risk be diversified away by investing in both Diversified Healthcare and Five Star 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 Diversified Healthcare and Five Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Healthcare Trust and Five Star Bancorp, you can compare the effects of market volatilities on Diversified Healthcare and Five Star 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 Diversified Healthcare with a short position of Five Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Healthcare and Five Star.
Diversification Opportunities for Diversified Healthcare and Five Star
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diversified and Five is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Healthcare Trust and Five Star Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Star Bancorp and Diversified 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 Diversified Healthcare Trust are associated (or correlated) with Five Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Star Bancorp has no effect on the direction of Diversified Healthcare i.e., Diversified Healthcare and Five Star go up and down completely randomly.
Pair Corralation between Diversified Healthcare and Five Star
Considering the 90-day investment horizon Diversified Healthcare Trust is expected to under-perform the Five Star. In addition to that, Diversified Healthcare is 1.81 times more volatile than Five Star Bancorp. It trades about -0.06 of its total potential returns per unit of risk. Five Star Bancorp is currently generating about -0.09 per unit of volatility. If you would invest 2,508 in Five Star Bancorp on January 21, 2024 and sell it today you would lose (314.00) from holding Five Star Bancorp or give up 12.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Healthcare Trust vs. Five Star Bancorp
Performance |
| Timeline |
| Diversified Healthcare |
| Five Star Bancorp |
Diversified Healthcare and Five Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Healthcare and Five Star
The main advantage of trading using opposite Diversified Healthcare and Five Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Healthcare position performs unexpectedly, Five Star 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 Five Star will offset losses from the drop in Five Star's long position.| Diversified Healthcare vs. Global Medical REIT | Diversified Healthcare vs. Healthpeak Properties | Diversified Healthcare vs. Ventas Inc | Diversified Healthcare vs. National Health Investors |
| Five Star vs. Community West Bancshares | Five Star vs. HMN Financial | Five Star vs. First Northwest Bancorp | Five Star vs. Cullman Bancorp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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