Correlation Between Prestige Brand and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Prestige Brand 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 Prestige Brand and Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and Acadia Healthcare, you can compare the effects of market volatilities on Prestige Brand 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 Prestige Brand with a short position of Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Acadia Healthcare.
Diversification Opportunities for Prestige Brand and Acadia Healthcare
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prestige and Acadia is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare and Prestige Brand 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 Prestige Brand Holdings 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 Prestige Brand i.e., Prestige Brand and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Prestige Brand and Acadia Healthcare
Considering the 90-day investment horizon Prestige Brand Holdings is expected to generate 0.27 times more return on investment than Acadia Healthcare. However, Prestige Brand Holdings is 3.76 times less risky than Acadia Healthcare. It trades about 0.57 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.24 per unit of risk. If you would invest 7,363 in Prestige Brand Holdings on August 27, 2024 and sell it today you would earn a total of 1,102 from holding Prestige Brand Holdings or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. Acadia Healthcare
Performance |
| Timeline |
| Prestige Brand Holdings |
| Acadia Healthcare |
Prestige Brand and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Acadia Healthcare
The main advantage of trading using opposite Prestige Brand and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand 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.| Prestige Brand vs. Evotec SE ADR | Prestige Brand vs. Supernus Pharmaceuticals | Prestige Brand vs. Collegium Pharmaceutical | Prestige Brand vs. Regencell Bioscience 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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