Correlation Between Brookdale Senior and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Strategic Investments 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 Strategic Investments 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 Strategic Investments AS, you can compare the effects of market volatilities on Brookdale Senior and Strategic Investments 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 Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Strategic Investments.
Diversification Opportunities for Brookdale Senior and Strategic Investments
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brookdale and Strategic is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Strategic Investments go up and down completely randomly.
Pair Corralation between Brookdale Senior and Strategic Investments
Assuming the 90 days horizon Brookdale Senior Living is expected to generate 0.67 times more return on investment than Strategic Investments. However, Brookdale Senior Living is 1.5 times less risky than Strategic Investments. It trades about 0.23 of its potential returns per unit of risk. Strategic Investments AS is currently generating about 0.02 per unit of risk. If you would invest 460.00 in Brookdale Senior Living on November 28, 2024 and sell it today you would earn a total of 75.00 from holding Brookdale Senior Living or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brookdale Senior Living vs. Strategic Investments AS
Performance |
| Timeline |
| Brookdale Senior Living |
| Strategic Investments |
Brookdale Senior and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Strategic Investments
The main advantage of trading using opposite Brookdale Senior and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| Brookdale Senior vs. Schweizer Electronic AG | Brookdale Senior vs. Australian Agricultural | Brookdale Senior vs. UET United Electronic | Brookdale Senior vs. United Microelectronics |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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