Correlation Between Trane Technologies and Medical Properties

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

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

Diversification Opportunities for Trane Technologies and Medical Properties

-0.85

Correlation Coefficient

Trane Technologies  Medical Properties

Pay attention - limited upside

The 3 months correlation between Trane and Medical is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Trane Technologies plc and Medical Properties Trust, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust, and Trane Technologies 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 Trane Technologies plc are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust, has no effect on the direction of Trane Technologies i.e., Trane Technologies and Medical Properties go up and down completely randomly.

Pair Corralation between Trane Technologies and Medical Properties

Assuming the 90 days trading horizon Trane Technologies plc is expected to generate 1.13 times more return on investment than Medical Properties. However, Trane Technologies is 1.13 times more volatile than Medical Properties Trust,. It trades about 0.18 of its potential returns per unit of risk. Medical Properties Trust, is currently generating about -0.1 per unit of risk. If you would invest  94,732  in Trane Technologies plc on April 24, 2025 and sell it today you would earn a total of  30,643  from holding Trane Technologies plc or generate 32.35% return on investment over 90 days.

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

Trane Technologies plc  vs.  Medical Properties Trust,

Trane Technologies plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trane Technologies plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trane Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Trane Technologies and Medical Properties

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

The idea behind Trane Technologies plc and Medical Properties 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.