Correlation Between Brookdale Senior and HCA Holdings
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and HCA Holdings 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 HCA Holdings 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 HCA Holdings, you can compare the effects of market volatilities on Brookdale Senior and HCA Holdings 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 HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and HCA Holdings.
Diversification Opportunities for Brookdale Senior and HCA Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brookdale and HCA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings 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 HCA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Holdings has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and HCA Holdings go up and down completely randomly.
Pair Corralation between Brookdale Senior and HCA Holdings
Considering the 90-day investment horizon Brookdale Senior is expected to generate 1.07 times less return on investment than HCA Holdings. In addition to that, Brookdale Senior is 1.71 times more volatile than HCA Holdings. It trades about 0.02 of its total potential returns per unit of risk. HCA Holdings is currently generating about 0.03 per unit of volatility. If you would invest 30,318 in HCA Holdings on August 28, 2024 and sell it today you would earn a total of 2,244 from holding HCA Holdings or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. HCA Holdings
Performance |
| Timeline |
| Brookdale Senior Living |
| HCA Holdings |
Brookdale Senior and HCA Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and HCA Holdings
The main advantage of trading using opposite Brookdale Senior and HCA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, HCA Holdings 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 HCA Holdings will offset losses from the drop in HCA Holdings' long position.| Brookdale Senior vs. The Ensign Group | Brookdale Senior vs. Community Health Systems | Brookdale Senior vs. National HealthCare | Brookdale Senior vs. Mednax Inc |
| HCA Holdings vs. Elevance Health | HCA Holdings vs. Centene Corp | HCA Holdings vs. UnitedHealth Group Incorporated | HCA Holdings vs. CVS Health Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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