Correlation Between InnovAge Holding and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both InnovAge Holding and Acadia 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 InnovAge Holding and Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InnovAge Holding Corp and Acadia Healthcare, you can compare the effects of market volatilities on InnovAge Holding and Acadia 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 InnovAge Holding with a short position of Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and Acadia Healthcare.
Diversification Opportunities for InnovAge Holding and Acadia Healthcare
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InnovAge and Acadia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare and InnovAge Holding 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 InnovAge Holding Corp are associated (or correlated) with Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Acadia Healthcare go up and down completely randomly.
Pair Corralation between InnovAge Holding and Acadia Healthcare
Given the investment horizon of 90 days InnovAge Holding Corp is expected to generate 1.7 times more return on investment than Acadia Healthcare. However, InnovAge Holding is 1.7 times more volatile than Acadia Healthcare. It trades about 0.0 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.06 per unit of risk. If you would invest 748.00 in InnovAge Holding Corp on August 24, 2024 and sell it today you would lose (259.00) from holding InnovAge Holding Corp or give up 34.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InnovAge Holding Corp vs. Acadia Healthcare
Performance |
| Timeline |
| InnovAge Holding Corp |
| Acadia Healthcare |
InnovAge Holding and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InnovAge Holding and Acadia Healthcare
The main advantage of trading using opposite InnovAge Holding and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnovAge Holding position performs unexpectedly, Acadia 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| InnovAge Holding vs. Addus HomeCare | InnovAge Holding vs. Morningstar Unconstrained Allocation | InnovAge Holding vs. SEI Investments | InnovAge Holding vs. Goosehead Insurance |
| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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