Correlation Between American Shared and Select Medical
Can any of the company-specific risk be diversified away by investing in both American Shared and Select Medical 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 American Shared and Select Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Shared Hospital and Select Medical Holdings, you can compare the effects of market volatilities on American Shared and Select Medical 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 American Shared with a short position of Select Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shared and Select Medical.
Diversification Opportunities for American Shared and Select Medical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Select is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital and Select Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Medical Holdings and American Shared 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 American Shared Hospital are associated (or correlated) with Select Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Medical Holdings has no effect on the direction of American Shared i.e., American Shared and Select Medical go up and down completely randomly.
Pair Corralation between American Shared and Select Medical
Considering the 90-day investment horizon American Shared Hospital is expected to under-perform the Select Medical. In addition to that, American Shared is 1.03 times more volatile than Select Medical Holdings. It trades about -0.04 of its total potential returns per unit of risk. Select Medical Holdings is currently generating about 0.14 per unit of volatility. If you would invest 1,879 in Select Medical Holdings on November 3, 2024 and sell it today you would earn a total of 88.00 from holding Select Medical Holdings or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Shared Hospital vs. Select Medical Holdings
Performance |
| Timeline |
| American Shared Hospital |
| Select Medical Holdings |
American Shared and Select Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Shared and Select Medical
The main advantage of trading using opposite American Shared and Select Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shared position performs unexpectedly, Select Medical 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 Select Medical will offset losses from the drop in Select Medical's long position.| American Shared vs. Ramsay Health Care | American Shared vs. Medical Facilities | American Shared vs. Jack Nathan Medical | American Shared vs. Fresenius SE Co |
| Select Medical vs. The Ensign Group | Select Medical vs. Encompass Health Corp | Select Medical vs. InnovAge Holding Corp | Select Medical vs. Enhabit |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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