Correlation Between BROOKDALE and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both BROOKDALE and Digilife Technologies 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 BROOKDALE and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROOKDALE SR LIVING and Digilife Technologies Limited, you can compare the effects of market volatilities on BROOKDALE and Digilife Technologies 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 BROOKDALE with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROOKDALE and Digilife Technologies.
Diversification Opportunities for BROOKDALE and Digilife Technologies
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between BROOKDALE and Digilife is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BROOKDALE SR LIVING and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies and BROOKDALE 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 BROOKDALE SR LIVING are associated (or correlated) with Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of BROOKDALE i.e., BROOKDALE and Digilife Technologies go up and down completely randomly.
Pair Corralation between BROOKDALE and Digilife Technologies
Assuming the 90 days trading horizon BROOKDALE SR LIVING is expected to under-perform the Digilife Technologies. But the stock apears to be less risky and, when comparing its historical volatility, BROOKDALE SR LIVING is 1.3 times less risky than Digilife Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The Digilife Technologies Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 82.00 in Digilife Technologies Limited on September 12, 2024 and sell it today you would lose (8.00) from holding Digilife Technologies Limited or give up 9.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
BROOKDALE SR LIVING vs. Digilife Technologies Limited
Performance |
| Timeline |
| BROOKDALE SR LIVING |
| Digilife Technologies |
BROOKDALE and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BROOKDALE and Digilife Technologies
The main advantage of trading using opposite BROOKDALE and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROOKDALE position performs unexpectedly, Digilife Technologies 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' long position.| BROOKDALE vs. FARO Technologies | BROOKDALE vs. DELTA AIR LINES | BROOKDALE vs. Altair Engineering | BROOKDALE vs. Digilife Technologies Limited |
| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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