Correlation Between SPECTRAL MEDICAL and Diversified Healthcare

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

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

Diversification Opportunities for SPECTRAL MEDICAL and Diversified Healthcare

0.13

Correlation Coefficient

SPECTRAL MEDICAL  Diversified Healthcare

Average diversification

The 3 months correlation between SPECTRAL and Diversified is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRAL MEDICAL and Diversified Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Healthcare and SPECTRAL MEDICAL 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 SPECTRAL MEDICAL are associated (or correlated) with Diversified Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Healthcare has no effect on the direction of SPECTRAL MEDICAL i.e., SPECTRAL MEDICAL and Diversified Healthcare go up and down completely randomly.

Pair Corralation between SPECTRAL MEDICAL and Diversified Healthcare

Assuming the 90 days horizon SPECTRAL MEDICAL is expected to under-perform the Diversified Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, SPECTRAL MEDICAL is 1.94 times less risky than Diversified Healthcare. The stock trades about 0.0 of its potential returns per unit of risk. The Diversified Healthcare Trust is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  198.00  in Diversified Healthcare Trust on April 25, 2025 and sell it today you would earn a total of  101.00  from holding Diversified Healthcare Trust or generate 51.01% return on investment over 90 days.

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

SPECTRAL MEDICAL  vs.  Diversified Healthcare Trust

SPECTRAL MEDICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPECTRAL MEDICAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Diversified Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Diversified Healthcare Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Diversified Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPECTRAL MEDICAL and Diversified Healthcare

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

The idea behind SPECTRAL MEDICAL and Diversified Healthcare 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.