Correlation Between AMN Healthcare and Community Health
Can any of the company-specific risk be diversified away by investing in both AMN Healthcare and Community Health 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 Community Health 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 Community Health Systems, you can compare the effects of market volatilities on AMN Healthcare and Community Health 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 Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and Community Health.
Diversification Opportunities for AMN Healthcare and Community Health
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMN and Community is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems 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 Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of AMN Healthcare i.e., AMN Healthcare and Community Health go up and down completely randomly.
Pair Corralation between AMN Healthcare and Community Health
Considering the 90-day investment horizon AMN Healthcare Services is expected to under-perform the Community Health. In addition to that, AMN Healthcare is 2.33 times more volatile than Community Health Systems. It trades about -0.19 of its total potential returns per unit of risk. Community Health Systems is currently generating about -0.13 per unit of volatility. If you would invest 410.00 in Community Health Systems on August 28, 2024 and sell it today you would lose (40.00) from holding Community Health Systems or give up 9.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMN Healthcare Services vs. Community Health Systems
Performance |
| Timeline |
| AMN Healthcare Services |
| Community Health Systems |
AMN Healthcare and Community Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMN Healthcare and Community Health
The main advantage of trading using opposite AMN Healthcare and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare position performs unexpectedly, Community Health 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 Community Health will offset losses from the drop in Community Health'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 |
| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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