Correlation Between Option Care and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Option Care 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 Option Care and Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Option Care Health and Acadia Healthcare, you can compare the effects of market volatilities on Option Care 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 Option Care with a short position of Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Option Care and Acadia Healthcare.
Diversification Opportunities for Option Care and Acadia Healthcare
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Option and Acadia is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare and Option Care 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 Option Care Health 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 Option Care i.e., Option Care and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Option Care and Acadia Healthcare
Given the investment horizon of 90 days Option Care Health is expected to generate 0.99 times more return on investment than Acadia Healthcare. However, Option Care Health is 1.01 times less risky than Acadia Healthcare. It trades about 0.01 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.14 per unit of risk. If you would invest 3,237 in Option Care Health on November 2, 2024 and sell it today you would lose (97.00) from holding Option Care Health or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Option Care Health vs. Acadia Healthcare
Performance |
| Timeline |
| Option Care Health |
| Acadia Healthcare |
Option Care and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Option Care and Acadia Healthcare
The main advantage of trading using opposite Option Care and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care 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.| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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