Correlation Between Power REIT and Ventas

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

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

Diversification Opportunities for Power REIT and Ventas

0.47

Correlation Coefficient

Power REIT  Ventas

Very weak diversification

The 3 months correlation between Power and Ventas is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Ventas Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc and Power REIT 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 Power REIT are associated (or correlated) with Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of Power REIT i.e., Power REIT and Ventas go up and down completely randomly.

Pair Corralation between Power REIT and Ventas

Allowing for the 90-day total investment horizon Power REIT is expected to generate 1.93 times less return on investment than Ventas. In addition to that, Power REIT is 1.57 times more volatile than Ventas Inc. It trades about 0.03 of its total potential returns per unit of risk. Ventas Inc is currently generating about 0.08 per unit of volatility. If you would invest  6,533  in Ventas Inc on May 6, 2025 and sell it today you would earn a total of  295.00  from holding Ventas Inc or generate 4.52% return on investment over 90 days.

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

Power REIT  vs.  Ventas Inc

Power REIT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Power REIT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Power REIT is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ventas Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ventas Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Ventas is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Power REIT and Ventas

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

The idea behind Power REIT and Ventas Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.