Correlation Between Medical Properties and Target Healthcare

Can any of the company-specific risk be diversified away by investing in both Medical Properties and Target 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 Medical Properties and Target Healthcare 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 Target Healthcare REIT, you can compare the effects of market volatilities on Medical Properties and Target 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 Medical Properties with a short position of Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Target Healthcare.

Diversification Opportunities for Medical Properties and Target Healthcare

-0.74

Correlation Coefficient

Medical Properties  Target Healthcare

Pay attention - limited upside

The 3 months correlation between Medical and Target is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Medical Properties i.e., Medical Properties and Target Healthcare go up and down completely randomly.

Pair Corralation between Medical Properties and Target Healthcare

Assuming the 90 days trading horizon Medical Properties is expected to generate 1.19 times less return on investment than Target Healthcare. In addition to that, Medical Properties is 2.19 times more volatile than Target Healthcare REIT. It trades about 0.06 of its total potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.15 per unit of volatility. If you would invest  8,046  in Target Healthcare REIT on March 25, 2025 and sell it today you would earn a total of  2,394  from holding Target Healthcare REIT or generate 29.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Medical Properties Trust  vs.  Target Healthcare REIT

Medical Properties Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Target Healthcare REIT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Target Healthcare REIT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Target Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medical Properties and Target Healthcare

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

The idea behind Medical Properties Trust and Target Healthcare REIT 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.