Correlation Between Brookdale Senior and Universal Health
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Universal Health 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 Universal Health 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 Universal Health Services, you can compare the effects of market volatilities on Brookdale Senior and Universal Health 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 Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Universal Health.
Diversification Opportunities for Brookdale Senior and Universal Health
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brookdale and Universal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Universal Health go up and down completely randomly.
Pair Corralation between Brookdale Senior and Universal Health
Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the Universal Health. In addition to that, Brookdale Senior is 1.07 times more volatile than Universal Health Services. It trades about -0.1 of its total potential returns per unit of risk. Universal Health Services is currently generating about 0.09 per unit of volatility. If you would invest 18,072 in Universal Health Services on October 22, 2024 and sell it today you would earn a total of 408.00 from holding Universal Health Services or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. Universal Health Services
Performance |
| Timeline |
| Brookdale Senior Living |
| Universal Health Services |
Brookdale Senior and Universal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Universal Health
The main advantage of trading using opposite Brookdale Senior and Universal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Universal Health 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 Universal Health will offset losses from the drop in Universal Health'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 |
| Universal Health vs. The Ensign Group | Universal Health vs. Addus HomeCare | Universal Health vs. Encompass Health Corp | Universal Health vs. Surgery Partners |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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