Correlation Between Acadia Healthcare and Healthcare Services
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and Healthcare Services 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 Healthcare Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and Healthcare Services Group, you can compare the effects of market volatilities on Acadia Healthcare and Healthcare Services 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 Healthcare Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and Healthcare Services.
Diversification Opportunities for Acadia Healthcare and Healthcare Services
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acadia and Healthcare is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and Healthcare Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Services 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 Healthcare Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Services has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and Healthcare Services go up and down completely randomly.
Pair Corralation between Acadia Healthcare and Healthcare Services
Given the investment horizon of 90 days Acadia Healthcare is expected to under-perform the Healthcare Services. In addition to that, Acadia Healthcare is 2.25 times more volatile than Healthcare Services Group. It trades about -0.2 of its total potential returns per unit of risk. Healthcare Services Group is currently generating about 0.23 per unit of volatility. If you would invest 1,102 in Healthcare Services Group on August 30, 2024 and sell it today you would earn a total of 111.00 from holding Healthcare Services Group or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. Healthcare Services Group
Performance |
| Timeline |
| Acadia Healthcare |
| Healthcare Services |
Acadia Healthcare and Healthcare Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and Healthcare Services
The main advantage of trading using opposite Acadia Healthcare and Healthcare Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, Healthcare Services 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 Healthcare Services will offset losses from the drop in Healthcare Services' long position.| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
| Healthcare Services vs. Pennant Group | Healthcare Services vs. Surgery Partners | Healthcare Services vs. The Ensign Group | Healthcare Services vs. Encompass Health Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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