Correlation Between Medical Facilities and DIRTT Environmental

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

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

Diversification Opportunities for Medical Facilities and DIRTT Environmental

0.22

Correlation Coefficient

Medical Facilities  DIRTT Environmental

Modest diversification

The 3 months correlation between Medical and DIRTT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and DIRTT Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIRTT Environmental and Medical Facilities 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 Medical Facilities are associated (or correlated) with DIRTT Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIRTT Environmental has no effect on the direction of Medical Facilities i.e., Medical Facilities and DIRTT Environmental go up and down completely randomly.

Pair Corralation between Medical Facilities and DIRTT Environmental

Assuming the 90 days horizon Medical Facilities is expected to generate 0.35 times more return on investment than DIRTT Environmental. However, Medical Facilities is 2.89 times less risky than DIRTT Environmental. It trades about -0.04 of its potential returns per unit of risk. DIRTT Environmental Solutions is currently generating about -0.06 per unit of risk. If you would invest  1,531  in Medical Facilities on May 21, 2025 and sell it today you would lose (62.00) from holding Medical Facilities or give up 4.05% of portfolio value over 90 days.

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

Medical Facilities  vs.  DIRTT Environmental Solutions

Medical Facilities

Risk-Adjusted Performance

Weakest

Over the last 90 days Medical Facilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Medical Facilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

DIRTT Environmental

Risk-Adjusted Performance

Weakest

Over the last 90 days DIRTT Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Medical Facilities and DIRTT Environmental

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

The idea behind Medical Facilities and DIRTT Environmental Solutions 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.