Correlation Between Acadia Healthcare and Dentsply Sirona
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and Dentsply Sirona 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 Dentsply Sirona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and Dentsply Sirona, you can compare the effects of market volatilities on Acadia Healthcare and Dentsply Sirona 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 Dentsply Sirona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and Dentsply Sirona.
Diversification Opportunities for Acadia Healthcare and Dentsply Sirona
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Acadia and Dentsply is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and Dentsply Sirona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dentsply Sirona 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 Dentsply Sirona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dentsply Sirona has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and Dentsply Sirona go up and down completely randomly.
Pair Corralation between Acadia Healthcare and Dentsply Sirona
Assuming the 90 days horizon Acadia Healthcare is expected to generate 1.19 times more return on investment than Dentsply Sirona. However, Acadia Healthcare is 1.19 times more volatile than Dentsply Sirona. It trades about -0.06 of its potential returns per unit of risk. Dentsply Sirona is currently generating about -0.08 per unit of risk. If you would invest 6,850 in Acadia Healthcare on October 12, 2024 and sell it today you would lose (2,410) from holding Acadia Healthcare or give up 35.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. Dentsply Sirona
Performance |
| Timeline |
| Acadia Healthcare |
| Dentsply Sirona |
Acadia Healthcare and Dentsply Sirona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and Dentsply Sirona
The main advantage of trading using opposite Acadia Healthcare and Dentsply Sirona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, Dentsply Sirona 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 Dentsply Sirona will offset losses from the drop in Dentsply Sirona's long position.| Acadia Healthcare vs. BC IRON | Acadia Healthcare vs. Monument Mining Limited | Acadia Healthcare vs. Dentsply Sirona | Acadia Healthcare vs. Nippon Steel |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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