Correlation Between Terreno Realty and Community Healthcare

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

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

Diversification Opportunities for Terreno Realty and Community Healthcare

0.52

Correlation Coefficient

Terreno Realty  Community Healthcare

Very weak diversification

The 3 months correlation between Terreno and Community is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Realty and Community Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Healthcare and Terreno Realty 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 Terreno Realty are associated (or correlated) with Community Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Healthcare has no effect on the direction of Terreno Realty i.e., Terreno Realty and Community Healthcare go up and down completely randomly.

Pair Corralation between Terreno Realty and Community Healthcare

Given the investment horizon of 90 days Terreno Realty is expected to generate 0.87 times more return on investment than Community Healthcare. However, Terreno Realty is 1.15 times less risky than Community Healthcare. It trades about -0.03 of its potential returns per unit of risk. Community Healthcare Trust is currently generating about -0.07 per unit of risk. If you would invest  5,641  in Terreno Realty on May 5, 2025 and sell it today you would lose (214.00) from holding Terreno Realty or give up 3.79% of portfolio value over 90 days.

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

Terreno Realty  vs.  Community Healthcare Trust

Terreno Realty

Risk-Adjusted Performance

Very Weak

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

Community Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Community Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Terreno Realty and Community Healthcare

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

The idea behind Terreno Realty and Community Healthcare Trust 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 Stocks Directory module to find actively traded stocks across global markets.