Correlation Between Amedisys and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Amedisys and Acadia Healthcare 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 Amedisys and Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedisys and Acadia Healthcare, you can compare the effects of market volatilities on Amedisys and Acadia Healthcare 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 Amedisys with a short position of Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and Acadia Healthcare.
Diversification Opportunities for Amedisys and Acadia Healthcare
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amedisys and Acadia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare and Amedisys 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 Amedisys are associated (or correlated) with Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Amedisys i.e., Amedisys and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Amedisys and Acadia Healthcare
Given the investment horizon of 90 days Amedisys is expected to generate 0.29 times more return on investment than Acadia Healthcare. However, Amedisys is 3.44 times less risky than Acadia Healthcare. It trades about -0.05 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.14 per unit of risk. If you would invest 9,752 in Amedisys on November 2, 2024 and sell it today you would lose (511.00) from holding Amedisys or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedisys vs. Acadia Healthcare
Performance |
| Timeline |
| Amedisys |
| Acadia Healthcare |
Amedisys and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedisys and Acadia Healthcare
The main advantage of trading using opposite Amedisys and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedisys position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| Amedisys vs. Acadia Healthcare | Amedisys vs. Addus HomeCare | Amedisys vs. Encompass Health Corp | Amedisys vs. The Ensign Group |
| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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