Correlation Between ALGOMA STEEL and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both ALGOMA STEEL and Brookdale Senior 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 ALGOMA STEEL and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALGOMA STEEL GROUP and Brookdale Senior Living, you can compare the effects of market volatilities on ALGOMA STEEL and Brookdale Senior 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 ALGOMA STEEL with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALGOMA STEEL and Brookdale Senior.
Diversification Opportunities for ALGOMA STEEL and Brookdale Senior
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALGOMA and Brookdale is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ALGOMA STEEL GROUP and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living and ALGOMA STEEL 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 ALGOMA STEEL GROUP are associated (or correlated) with Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of ALGOMA STEEL i.e., ALGOMA STEEL and Brookdale Senior go up and down completely randomly.
Pair Corralation between ALGOMA STEEL and Brookdale Senior
Assuming the 90 days horizon ALGOMA STEEL GROUP is expected to under-perform the Brookdale Senior. But the stock apears to be less risky and, when comparing its historical volatility, ALGOMA STEEL GROUP is 1.61 times less risky than Brookdale Senior. The stock trades about -0.43 of its potential returns per unit of risk. The Brookdale Senior Living is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 460.00 in Brookdale Senior Living on November 28, 2024 and sell it today you would earn a total of 75.00 from holding Brookdale Senior Living or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ALGOMA STEEL GROUP vs. Brookdale Senior Living
Performance |
| Timeline |
| ALGOMA STEEL GROUP |
| Brookdale Senior Living |
ALGOMA STEEL and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALGOMA STEEL and Brookdale Senior
The main advantage of trading using opposite ALGOMA STEEL and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALGOMA STEEL position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| ALGOMA STEEL vs. Nucor | ALGOMA STEEL vs. ArcelorMittal SA | ALGOMA STEEL vs. ArcelorMittal | ALGOMA STEEL vs. Steel Dynamics |
| Brookdale Senior vs. Schweizer Electronic AG | Brookdale Senior vs. Australian Agricultural | Brookdale Senior vs. UET United Electronic | Brookdale Senior vs. United Microelectronics |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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