Correlation Between Acadia Healthcare and ModivCare
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and ModivCare 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 ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and ModivCare, you can compare the effects of market volatilities on Acadia Healthcare and ModivCare 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 ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and ModivCare.
Diversification Opportunities for Acadia Healthcare and ModivCare
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Acadia and ModivCare is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare 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 ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and ModivCare go up and down completely randomly.
Pair Corralation between Acadia Healthcare and ModivCare
Given the investment horizon of 90 days Acadia Healthcare is expected to generate 0.37 times more return on investment than ModivCare. However, Acadia Healthcare is 2.71 times less risky than ModivCare. It trades about -0.08 of its potential returns per unit of risk. ModivCare is currently generating about -0.06 per unit of risk. If you would invest 8,482 in Acadia Healthcare on November 9, 2024 and sell it today you would lose (4,210) from holding Acadia Healthcare or give up 49.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. ModivCare
Performance |
| Timeline |
| Acadia Healthcare |
| ModivCare |
Acadia Healthcare and ModivCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and ModivCare
The main advantage of trading using opposite Acadia Healthcare and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, ModivCare 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 ModivCare will offset losses from the drop in ModivCare's long position.| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
| ModivCare vs. The Ensign Group | ModivCare vs. Select Medical Holdings | ModivCare vs. Encompass Health Corp | ModivCare vs. InnovAge Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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