Correlation Between Cass Information and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Cass Information and Brookdale Senior 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 Cass Information and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Information Systems and Brookdale Senior Living, you can compare the effects of market volatilities on Cass Information and Brookdale Senior 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 Cass Information with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Brookdale Senior.
Diversification Opportunities for Cass Information and Brookdale Senior
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cass and Brookdale is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living and Cass Information 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 Cass Information Systems are associated (or correlated) with Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of Cass Information i.e., Cass Information and Brookdale Senior go up and down completely randomly.
Pair Corralation between Cass Information and Brookdale Senior
Given the investment horizon of 90 days Cass Information is expected to generate 4.88 times less return on investment than Brookdale Senior. But when comparing it to its historical volatility, Cass Information Systems is 2.17 times less risky than Brookdale Senior. It trades about 0.08 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 492.00 in Brookdale Senior Living on December 24, 2024 and sell it today you would earn a total of 110.00 from holding Brookdale Senior Living or generate 22.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Cass Information Systems vs. Brookdale Senior Living
Performance |
| Timeline |
| Cass Information Systems |
| Brookdale Senior Living |
Cass Information and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Brookdale Senior
The main advantage of trading using opposite Cass Information and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| Cass Information vs. First Advantage Corp | Cass Information vs. Rentokil Initial PLC | Cass Information vs. CBIZ Inc | Cass Information vs. Civeo Corp |
| Brookdale Senior vs. The Ensign Group | Brookdale Senior vs. Community Health Systems | Brookdale Senior vs. National HealthCare | Brookdale Senior vs. Mednax Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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