Correlation Between Brookdale Senior and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Acadia Healthcare 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 Acadia Healthcare 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 Acadia Healthcare, you can compare the effects of market volatilities on Brookdale Senior and Acadia Healthcare 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Acadia Healthcare.
Diversification Opportunities for Brookdale Senior and Acadia Healthcare
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brookdale and Acadia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Brookdale Senior and Acadia Healthcare
Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the Acadia Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Brookdale Senior Living is 1.25 times less risky than Acadia Healthcare. The stock trades about -0.2 of its potential returns per unit of risk. The Acadia Healthcare is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,077 in Acadia Healthcare on November 3, 2024 and sell it today you would earn a total of 434.00 from holding Acadia Healthcare or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. Acadia Healthcare
Performance |
| Timeline |
| Brookdale Senior Living |
| Acadia Healthcare |
Brookdale Senior and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Acadia Healthcare
The main advantage of trading using opposite Brookdale Senior and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| Brookdale Senior vs. The Ensign Group | Brookdale Senior vs. Community Health Systems | Brookdale Senior vs. National HealthCare | Brookdale Senior vs. Mednax Inc |
| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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