Correlation Between AMN Healthcare and Central Garden
Can any of the company-specific risk be diversified away by investing in both AMN Healthcare and Central Garden 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 AMN Healthcare and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMN Healthcare Services and Central Garden Pet, you can compare the effects of market volatilities on AMN Healthcare and Central Garden 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 AMN Healthcare with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and Central Garden.
Diversification Opportunities for AMN Healthcare and Central Garden
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMN and Central is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and AMN 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 AMN Healthcare Services are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of AMN Healthcare i.e., AMN Healthcare and Central Garden go up and down completely randomly.
Pair Corralation between AMN Healthcare and Central Garden
Considering the 90-day investment horizon AMN Healthcare Services is expected to under-perform the Central Garden. In addition to that, AMN Healthcare is 1.64 times more volatile than Central Garden Pet. It trades about -0.08 of its total potential returns per unit of risk. Central Garden Pet is currently generating about 0.02 per unit of volatility. If you would invest 3,101 in Central Garden Pet on August 24, 2024 and sell it today you would earn a total of 217.00 from holding Central Garden Pet or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMN Healthcare Services vs. Central Garden Pet
Performance |
| Timeline |
| AMN Healthcare Services |
| Central Garden Pet |
AMN Healthcare and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMN Healthcare and Central Garden
The main advantage of trading using opposite AMN Healthcare and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| AMN Healthcare vs. Option Care Health | AMN Healthcare vs. Addus HomeCare | AMN Healthcare vs. Acadia Healthcare | AMN Healthcare vs. Encompass Health Corp |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. Central Garden Pet |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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