Correlation Between Community Health and AMN Healthcare
Can any of the company-specific risk be diversified away by investing in both Community Health and AMN Healthcare 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 Community Health and AMN Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Health Systems and AMN Healthcare Services, you can compare the effects of market volatilities on Community Health and AMN Healthcare 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 Community Health with a short position of AMN Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Health and AMN Healthcare.
Diversification Opportunities for Community Health and AMN Healthcare
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and AMN is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Community Health Systems and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services and Community Health 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 Community Health Systems are associated (or correlated) with AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Community Health i.e., Community Health and AMN Healthcare go up and down completely randomly.
Pair Corralation between Community Health and AMN Healthcare
Considering the 90-day investment horizon Community Health Systems is expected to generate 1.71 times more return on investment than AMN Healthcare. However, Community Health is 1.71 times more volatile than AMN Healthcare Services. It trades about 0.03 of its potential returns per unit of risk. AMN Healthcare Services is currently generating about -0.08 per unit of risk. If you would invest 331.00 in Community Health Systems on August 24, 2024 and sell it today you would earn a total of 34.00 from holding Community Health Systems or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Health Systems vs. AMN Healthcare Services
Performance |
| Timeline |
| Community Health Systems |
| AMN Healthcare Services |
Community Health and AMN Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Health and AMN Healthcare
The main advantage of trading using opposite Community Health and AMN Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Health position performs unexpectedly, AMN Healthcare 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 AMN Healthcare will offset losses from the drop in AMN Healthcare's long position.| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
| AMN Healthcare vs. Option Care Health | AMN Healthcare vs. Addus HomeCare | AMN Healthcare vs. Acadia Healthcare | AMN Healthcare vs. Encompass 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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