Correlation Between Brookdale Senior and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Dow Jones 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 Senior and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookdale Senior Living and Dow Jones Industrial, you can compare the effects of market volatilities on Brookdale Senior and Dow Jones 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 Senior with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Dow Jones.
Diversification Opportunities for Brookdale Senior and Dow Jones
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brookdale and Dow is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Brookdale Senior 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 Senior Living are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Dow Jones go up and down completely randomly.
Pair Corralation between Brookdale Senior and Dow Jones
Assuming the 90 days horizon Brookdale Senior Living is expected to under-perform the Dow Jones. In addition to that, Brookdale Senior is 3.5 times more volatile than Dow Jones Industrial. It trades about -0.15 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 190,894 from holding Dow Jones Industrial or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. Dow Jones Industrial
Performance |
| Timeline |
Brookdale Senior and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Brookdale Senior Living
Pair trading matchups for Brookdale Senior
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Brookdale Senior and Dow Jones
The main advantage of trading using opposite Brookdale Senior and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Brookdale Senior vs. Option Care Health | Brookdale Senior vs. HYGEIA HC HLDGS | Brookdale Senior vs. Superior Plus Corp | Brookdale Senior vs. Origin Agritech |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |