Correlation Between AMN Healthcare and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both AMN Healthcare 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 AMN Healthcare and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMN Healthcare Services and Brookdale Senior Living, you can compare the effects of market volatilities on AMN Healthcare 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 AMN Healthcare with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and Brookdale Senior.
Diversification Opportunities for AMN Healthcare and Brookdale Senior
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AMN and Brookdale is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services 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 AMN Healthcare 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 AMN Healthcare Services 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 AMN Healthcare i.e., AMN Healthcare and Brookdale Senior go up and down completely randomly.
Pair Corralation between AMN Healthcare and Brookdale Senior
Considering the 90-day investment horizon AMN Healthcare Services is expected to under-perform the Brookdale Senior. But the stock apears to be less risky and, when comparing its historical volatility, AMN Healthcare Services is 1.25 times less risky than Brookdale Senior. The stock trades about -0.2 of its potential returns per unit of risk. The Brookdale Senior Living is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 646.00 in Brookdale Senior Living on January 25, 2024 and sell it today you would earn a total of 29.00 from holding Brookdale Senior Living or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AMN Healthcare Services vs. Brookdale Senior Living
Performance |
| Timeline |
| AMN Healthcare Services |
| Brookdale Senior Living |
AMN Healthcare and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMN Healthcare and Brookdale Senior
The main advantage of trading using opposite AMN Healthcare and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare 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.| AMN Healthcare vs. Option Care Health | AMN Healthcare vs. Addus HomeCare | AMN Healthcare vs. Acadia Healthcare | AMN Healthcare vs. Encompass Health Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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