Correlation Between Medical Properties and IGM Financial

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

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

Diversification Opportunities for Medical Properties and IGM Financial

0.27

Correlation Coefficient

Medical Properties  IGM Financial

Modest diversification

The 3 months correlation between Medical and IGM is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and IGM Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGM Financial and Medical 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 Medical Properties Trust are associated (or correlated) with IGM Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGM Financial has no effect on the direction of Medical Properties i.e., Medical Properties and IGM Financial go up and down completely randomly.

Pair Corralation between Medical Properties and IGM Financial

Considering the 90-day investment horizon Medical Properties Trust is expected to generate 2.82 times more return on investment than IGM Financial. However, Medical Properties is 2.82 times more volatile than IGM Financial. It trades about 0.14 of its potential returns per unit of risk. IGM Financial is currently generating about 0.06 per unit of risk. If you would invest  349.00  in Medical Properties Trust on February 17, 2024 and sell it today you would earn a total of  163.00  from holding Medical Properties Trust or generate 46.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Medical Properties Trust  vs.  IGM Financial

Medical Properties Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Medical Properties showed solid returns over the last few months and may actually be approaching a breakup point.

IGM Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IGM Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, IGM Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Medical Properties and IGM Financial

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

The idea behind Medical Properties Trust and IGM Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.