Correlation Between Acadia Healthcare and BC IRON
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and BC IRON 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 Acadia Healthcare and BC IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and BC IRON, you can compare the effects of market volatilities on Acadia Healthcare and BC IRON 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 Acadia Healthcare with a short position of BC IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and BC IRON.
Diversification Opportunities for Acadia Healthcare and BC IRON
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acadia and BC3 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON and Acadia 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 Acadia Healthcare are associated (or correlated) with BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and BC IRON go up and down completely randomly.
Pair Corralation between Acadia Healthcare and BC IRON
Assuming the 90 days horizon Acadia Healthcare is expected to generate 0.86 times more return on investment than BC IRON. However, Acadia Healthcare is 1.16 times less risky than BC IRON. It trades about 0.41 of its potential returns per unit of risk. BC IRON is currently generating about 0.02 per unit of risk. If you would invest 3,680 in Acadia Healthcare on October 12, 2024 and sell it today you would earn a total of 760.00 from holding Acadia Healthcare or generate 20.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. BC IRON
Performance |
| Timeline |
| Acadia Healthcare |
| BC IRON |
Acadia Healthcare and BC IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and BC IRON
The main advantage of trading using opposite Acadia Healthcare and BC IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, BC IRON 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 BC IRON will offset losses from the drop in BC IRON's long position.| Acadia Healthcare vs. BC IRON | Acadia Healthcare vs. Monument Mining Limited | Acadia Healthcare vs. Dentsply Sirona | Acadia Healthcare vs. Nippon Steel |
| BC IRON vs. Gold Road Resources | BC IRON vs. TRAINLINE PLC LS | BC IRON vs. SBM OFFSHORE | BC IRON vs. Treasury Wine Estates |
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 Stocks Directory module to find actively traded stocks across global markets.
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