Correlation Between DRI Healthcare and European Residential

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

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

Diversification Opportunities for DRI Healthcare and European Residential

0.17

Correlation Coefficient

DRI Healthcare  European Residential

Average diversification

The 3 months correlation between DRI and European is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and DRI Healthcare 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 DRI Healthcare Trust are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of DRI Healthcare i.e., DRI Healthcare and European Residential go up and down completely randomly.

Pair Corralation between DRI Healthcare and European Residential

Assuming the 90 days trading horizon DRI Healthcare Trust is expected to generate 1.46 times more return on investment than European Residential. However, DRI Healthcare is 1.46 times more volatile than European Residential Real. It trades about 0.34 of its potential returns per unit of risk. European Residential Real is currently generating about 0.08 per unit of risk. If you would invest  1,116  in DRI Healthcare Trust on April 24, 2025 and sell it today you would earn a total of  379.00  from holding DRI Healthcare Trust or generate 33.96% return on investment over 90 days.

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

DRI Healthcare Trust  vs.  European Residential Real

DRI Healthcare Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DRI Healthcare Trust are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, DRI Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

European Residential Real

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in European Residential Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, European Residential is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DRI Healthcare and European Residential

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

The idea behind DRI Healthcare Trust and European Residential Real 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.