Correlation Between Community Health and BrightSpring Health
Can any of the company-specific risk be diversified away by investing in both Community Health and BrightSpring 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 Community Health and BrightSpring Health 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 BrightSpring Health Services,, you can compare the effects of market volatilities on Community Health and BrightSpring 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 Community Health with a short position of BrightSpring Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Health and BrightSpring Health.
Diversification Opportunities for Community Health and BrightSpring Health
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Community and BrightSpring is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Community Health Systems and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health 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 BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Community Health i.e., Community Health and BrightSpring Health go up and down completely randomly.
Pair Corralation between Community Health and BrightSpring Health
Considering the 90-day investment horizon Community Health Systems is expected to under-perform the BrightSpring Health. But the stock apears to be less risky and, when comparing its historical volatility, Community Health Systems is 1.04 times less risky than BrightSpring Health. The stock trades about -0.32 of its potential returns per unit of risk. The BrightSpring Health Services, is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 5,702 in BrightSpring Health Services, on August 31, 2024 and sell it today you would earn a total of 1,213 from holding BrightSpring Health Services, or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Health Systems vs. BrightSpring Health Services,
Performance |
| Timeline |
| Community Health Systems |
| BrightSpring Health |
Community Health and BrightSpring Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Health and BrightSpring Health
The main advantage of trading using opposite Community Health and BrightSpring Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Health position performs unexpectedly, BrightSpring 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 BrightSpring Health will offset losses from the drop in BrightSpring Health's long position.| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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