Correlation Between Brookdale Senior and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Addus HomeCare 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 Addus HomeCare 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 Addus HomeCare, you can compare the effects of market volatilities on Brookdale Senior and Addus HomeCare 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 Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Addus HomeCare.
Diversification Opportunities for Brookdale Senior and Addus HomeCare
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brookdale and Addus is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare 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 Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Addus HomeCare go up and down completely randomly.
Pair Corralation between Brookdale Senior and Addus HomeCare
Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the Addus HomeCare. In addition to that, Brookdale Senior is 1.45 times more volatile than Addus HomeCare. It trades about -0.1 of its total potential returns per unit of risk. Addus HomeCare is currently generating about 0.2 per unit of volatility. If you would invest 12,886 in Addus HomeCare on October 22, 2024 and sell it today you would earn a total of 501.00 from holding Addus HomeCare or generate 3.89% 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. Addus HomeCare
Performance |
| Timeline |
| Brookdale Senior Living |
| Addus HomeCare |
Brookdale Senior and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Addus HomeCare
The main advantage of trading using opposite Brookdale Senior and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare'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 |
| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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