Correlation Between Varta AG and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Varta AG 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 Varta AG and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Varta AG and Brookdale Senior Living, you can compare the effects of market volatilities on Varta AG 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 Varta AG with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varta AG and Brookdale Senior.
Diversification Opportunities for Varta AG and Brookdale Senior
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Varta and Brookdale is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG 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 Varta AG 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 Varta AG 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 Varta AG i.e., Varta AG and Brookdale Senior go up and down completely randomly.
Pair Corralation between Varta AG and Brookdale Senior
Assuming the 90 days trading horizon Varta AG is expected to generate 5.17 times more return on investment than Brookdale Senior. However, Varta AG is 5.17 times more volatile than Brookdale Senior Living. It trades about 0.12 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about -0.06 per unit of risk. If you would invest 148.00 in Varta AG on August 30, 2024 and sell it today you would earn a total of 57.00 from holding Varta AG or generate 38.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Varta AG vs. Brookdale Senior Living
Performance |
| Timeline |
| Varta AG |
| Brookdale Senior Living |
Varta AG and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Varta AG and Brookdale Senior
The main advantage of trading using opposite Varta AG and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varta AG 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.| Varta AG vs. Nippon Steel | Varta AG vs. CECO ENVIRONMENTAL | Varta AG vs. Playa Hotels Resorts | Varta AG vs. COVIVIO HOTELS INH |
| Brookdale Senior vs. ALGOMA STEEL GROUP | Brookdale Senior vs. LEGACY IRON ORE | Brookdale Senior vs. ABO GROUP ENVIRONMENT | Brookdale Senior vs. Nippon Steel |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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