Correlation Between Brookdale Senior and Premier
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Premier 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 Premier 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 Premier, you can compare the effects of market volatilities on Brookdale Senior and Premier 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 Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Premier.
Diversification Opportunities for Brookdale Senior and Premier
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brookdale and Premier is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier 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 Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Premier go up and down completely randomly.
Pair Corralation between Brookdale Senior and Premier
Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the Premier. In addition to that, Brookdale Senior is 1.09 times more volatile than Premier. It trades about -0.15 of its total potential returns per unit of risk. Premier is currently generating about 0.22 per unit of volatility. If you would invest 1,985 in Premier on August 25, 2024 and sell it today you would earn a total of 299.00 from holding Premier or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. Premier
Performance |
| Timeline |
| Brookdale Senior Living |
| Premier |
Brookdale Senior and Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Premier
The main advantage of trading using opposite Brookdale Senior and Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Premier 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 Premier will offset losses from the drop in Premier's long position.| Brookdale Senior vs. Addus HomeCare | Brookdale Senior vs. Morningstar Unconstrained Allocation | Brookdale Senior vs. SEI Investments | Brookdale Senior vs. Goosehead Insurance |
| Premier vs. National Research Corp | Premier vs. Definitive Healthcare Corp | Premier vs. HealthStream | Premier vs. Privia Health Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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