Correlation Between Acadia Healthcare and WashTec AG
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and WashTec AG 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 WashTec AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and WashTec AG, you can compare the effects of market volatilities on Acadia Healthcare and WashTec AG 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 WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and WashTec AG.
Diversification Opportunities for Acadia Healthcare and WashTec AG
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Acadia and WashTec is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and WashTec AG go up and down completely randomly.
Pair Corralation between Acadia Healthcare and WashTec AG
Given the investment horizon of 90 days Acadia Healthcare is expected to under-perform the WashTec AG. In addition to that, Acadia Healthcare is 1.29 times more volatile than WashTec AG. It trades about -0.12 of its total potential returns per unit of risk. WashTec AG is currently generating about 0.13 per unit of volatility. If you would invest 280.00 in WashTec AG on September 3, 2024 and sell it today you would earn a total of 131.00 from holding WashTec AG or generate 46.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acadia Healthcare vs. WashTec AG
Performance |
| Timeline |
| Acadia Healthcare |
| WashTec AG |
Acadia Healthcare and WashTec AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acadia Healthcare and WashTec AG
The main advantage of trading using opposite Acadia Healthcare and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG'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 |
| WashTec AG vs. Ramsay Health Care | WashTec AG vs. Medical Facilities | WashTec AG vs. Jack Nathan Medical | WashTec AG vs. Fresenius SE Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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