Correlation Between Essential Properties and Healthpeak Properties

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

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

Diversification Opportunities for Essential Properties and Healthpeak Properties

-0.43

Correlation Coefficient

Essential Properties  Healthpeak Properties

Very good diversification

The 3 months correlation between Essential and Healthpeak is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and Essential Properties 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 Essential Properties Realty 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 Essential Properties i.e., Essential Properties and Healthpeak Properties go up and down completely randomly.

Pair Corralation between Essential Properties and Healthpeak Properties

Given the investment horizon of 90 days Essential Properties Realty is expected to under-perform the Healthpeak Properties. But the stock apears to be less risky and, when comparing its historical volatility, Essential Properties Realty is 1.35 times less risky than Healthpeak Properties. The stock trades about -0.08 of its potential returns per unit of risk. The Healthpeak Properties is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,717  in Healthpeak Properties on May 9, 2025 and sell it today you would earn a total of  2.00  from holding Healthpeak Properties or generate 0.12% return on investment over 90 days.

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

Essential Properties Realty  vs.  Healthpeak Properties

Essential Properties

Risk-Adjusted Performance

Weakest

Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Healthpeak Properties

Risk-Adjusted Performance

Weakest

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Healthpeak Properties is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Essential Properties and Healthpeak Properties

The main advantage of trading using opposite Essential Properties and Healthpeak Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties 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 Essential Properties Realty 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..