Correlation Between Acadia Healthcare and SPECTRAL MEDICAL
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and SPECTRAL MEDICAL 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 SPECTRAL MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and SPECTRAL MEDICAL, you can compare the effects of market volatilities on Acadia Healthcare and SPECTRAL MEDICAL 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 SPECTRAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and SPECTRAL MEDICAL.
Diversification Opportunities for Acadia Healthcare and SPECTRAL MEDICAL
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Acadia and SPECTRAL is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and SPECTRAL MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRAL MEDICAL 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 SPECTRAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRAL MEDICAL has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and SPECTRAL MEDICAL go up and down completely randomly.
Pair Corralation between Acadia Healthcare and SPECTRAL MEDICAL
Assuming the 90 days horizon Acadia Healthcare is expected to generate 0.86 times more return on investment than SPECTRAL MEDICAL. However, Acadia Healthcare is 1.16 times less risky than SPECTRAL MEDICAL. It trades about 0.29 of its potential returns per unit of risk. SPECTRAL MEDICAL is currently generating about 0.06 per unit of risk. If you would invest 3,620 in Acadia Healthcare on October 29, 2024 and sell it today you would earn a total of 620.00 from holding Acadia Healthcare or generate 17.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. SPECTRAL MEDICAL
Performance |
| Timeline |
| Acadia Healthcare |
| SPECTRAL MEDICAL |
Acadia Healthcare and SPECTRAL MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and SPECTRAL MEDICAL
The main advantage of trading using opposite Acadia Healthcare and SPECTRAL MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, SPECTRAL MEDICAL 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 SPECTRAL MEDICAL will offset losses from the drop in SPECTRAL MEDICAL's long position.| Acadia Healthcare vs. Spirent Communications plc | Acadia Healthcare vs. Cars Inc | Acadia Healthcare vs. CarsalesCom | Acadia Healthcare vs. Singapore Telecommunications Limited |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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