Correlation Between Elevance Health and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Elevance Health 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 Elevance Health and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elevance Health and Brookdale Senior Living, you can compare the effects of market volatilities on Elevance Health 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 Elevance Health with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elevance Health and Brookdale Senior.
Diversification Opportunities for Elevance Health and Brookdale Senior
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elevance and Brookdale is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health 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 Elevance 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 Elevance Health 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 Elevance Health i.e., Elevance Health and Brookdale Senior go up and down completely randomly.
Pair Corralation between Elevance Health and Brookdale Senior
Considering the 90-day investment horizon Elevance Health is expected to generate 0.38 times more return on investment than Brookdale Senior. However, Elevance Health is 2.61 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 -0.16 per unit of risk. If you would invest 41,786 in Elevance Health on September 5, 2024 and sell it today you would lose (979.00) from holding Elevance Health or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elevance Health vs. Brookdale Senior Living
Performance |
| Timeline |
| Elevance Health |
| Brookdale Senior Living |
Elevance Health and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elevance Health and Brookdale Senior
The main advantage of trading using opposite Elevance Health and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health 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.| Elevance Health vs. Cigna Corp | Elevance Health vs. UnitedHealth Group Incorporated | Elevance Health vs. Centene Corp | Elevance Health vs. Molina Healthcare |
| Brookdale Senior vs. Humana Inc | Brookdale Senior vs. Elevance Health | Brookdale Senior vs. UnitedHealth Group Incorporated | Brookdale Senior vs. Molina Healthcare |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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