Correlation Between Brookdale Senior and American Shared
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and American Shared 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 American Shared 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 American Shared Hospital, you can compare the effects of market volatilities on Brookdale Senior and American Shared 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 American Shared. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and American Shared.
Diversification Opportunities for Brookdale Senior and American Shared
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Brookdale and American is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital 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 American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and American Shared go up and down completely randomly.
Pair Corralation between Brookdale Senior and American Shared
Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the American Shared. In addition to that, Brookdale Senior is 1.17 times more volatile than American Shared Hospital. It trades about -0.2 of its total potential returns per unit of risk. American Shared Hospital is currently generating about -0.04 per unit of volatility. If you would invest 313.00 in American Shared Hospital on November 3, 2024 and sell it today you would lose (5.00) from holding American Shared Hospital or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. American Shared Hospital
Performance |
| Timeline |
| Brookdale Senior Living |
| American Shared Hospital |
Brookdale Senior and American Shared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and American Shared
The main advantage of trading using opposite Brookdale Senior and American Shared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, American Shared 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 American Shared will offset losses from the drop in American Shared'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 |
| American Shared vs. Ramsay Health Care | American Shared vs. Medical Facilities | American Shared vs. Jack Nathan Medical | American Shared vs. Fresenius SE Co |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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