Correlation Between Ventas and Universal Health

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

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

Diversification Opportunities for Ventas and Universal Health

0.78

Correlation Coefficient

Ventas  Universal Health

Poor diversification

The 3 months correlation between Ventas and Universal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and Universal Health Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Realty and Ventas 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 Ventas Inc are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Realty has no effect on the direction of Ventas i.e., Ventas and Universal Health go up and down completely randomly.

Pair Corralation between Ventas and Universal Health

Considering the 90-day investment horizon Ventas Inc is expected to generate 0.89 times more return on investment than Universal Health. However, Ventas Inc is 1.12 times less risky than Universal Health. It trades about 0.16 of its potential returns per unit of risk. Universal Health Realty is currently generating about 0.12 per unit of risk. If you would invest  4,761  in Ventas Inc on March 14, 2024 and sell it today you would earn a total of  198.00  from holding Ventas Inc or generate 4.16% return on investment over 90 days.

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

Ventas Inc  vs.  Universal Health Realty

Ventas Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ventas Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Ventas reported solid returns over the last few months and may actually be approaching a breakup point.

Universal Health Realty

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Health Realty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Universal Health may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Ventas and Universal Health

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

The idea behind Ventas Inc and Universal Health Realty 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 CEOs Directory module to screen CEOs from public companies around the world.