Correlation Between Brookdale Senior and InnovAge Holding
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and InnovAge Holding 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 InnovAge Holding 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 InnovAge Holding Corp, you can compare the effects of market volatilities on Brookdale Senior and InnovAge Holding 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 InnovAge Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and InnovAge Holding.
Diversification Opportunities for Brookdale Senior and InnovAge Holding
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brookdale and InnovAge is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and InnovAge Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnovAge Holding Corp 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 InnovAge Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnovAge Holding Corp has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and InnovAge Holding go up and down completely randomly.
Pair Corralation between Brookdale Senior and InnovAge Holding
Considering the 90-day investment horizon Brookdale Senior Living is expected to generate 0.67 times more return on investment than InnovAge Holding. However, Brookdale Senior Living is 1.49 times less risky than InnovAge Holding. It trades about -0.1 of its potential returns per unit of risk. InnovAge Holding Corp is currently generating about -0.4 per unit of risk. If you would invest 511.00 in Brookdale Senior Living on October 22, 2024 and sell it today you would lose (15.00) from holding Brookdale Senior Living or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. InnovAge Holding Corp
Performance |
| Timeline |
| Brookdale Senior Living |
| InnovAge Holding Corp |
Brookdale Senior and InnovAge Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and InnovAge Holding
The main advantage of trading using opposite Brookdale Senior and InnovAge Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, InnovAge Holding 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 InnovAge Holding will offset losses from the drop in InnovAge Holding'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 |
| InnovAge Holding vs. The Ensign Group | InnovAge Holding vs. Select Medical Holdings | InnovAge Holding vs. Encompass Health Corp | InnovAge Holding vs. Enhabit |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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