Correlation Between WashTec AG and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both WashTec AG 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 WashTec AG and Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WashTec AG and Acadia Healthcare, you can compare the effects of market volatilities on WashTec AG 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 WashTec AG with a short position of Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of WashTec AG and Acadia Healthcare.
Diversification Opportunities for WashTec AG and Acadia Healthcare
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WashTec and Acadia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding WashTec AG and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare and WashTec 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 WashTec AG 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 WashTec AG i.e., WashTec AG and Acadia Healthcare go up and down completely randomly.
Pair Corralation between WashTec AG and Acadia Healthcare
Assuming the 90 days horizon WashTec AG is expected to generate 1.49 times more return on investment than Acadia Healthcare. However, WashTec AG is 1.49 times more volatile than Acadia Healthcare. It trades about 0.38 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.08 per unit of risk. If you would invest 318.00 in WashTec AG on September 3, 2024 and sell it today you would earn a total of 93.00 from holding WashTec AG or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WashTec AG vs. Acadia Healthcare
Performance |
| Timeline |
| WashTec AG |
| Acadia Healthcare |
WashTec AG and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WashTec AG and Acadia Healthcare
The main advantage of trading using opposite WashTec AG and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WashTec AG 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.| WashTec AG vs. Ramsay Health Care | WashTec AG vs. Medical Facilities | WashTec AG vs. Jack Nathan Medical | WashTec AG vs. Fresenius SE Co |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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