Correlation Between Brookdale Senior and Concord Medical
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Concord Medical 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 Brookdale Senior and Concord Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookdale Senior Living and Concord Medical Services, you can compare the effects of market volatilities on Brookdale Senior and Concord Medical 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 Brookdale Senior with a short position of Concord Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Concord Medical.
Diversification Opportunities for Brookdale Senior and Concord Medical
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookdale and Concord is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services and Brookdale Senior 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 Brookdale Senior Living are associated (or correlated) with Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Concord Medical go up and down completely randomly.
Pair Corralation between Brookdale Senior and Concord Medical
Considering the 90-day investment horizon Brookdale Senior is expected to generate 9.59 times less return on investment than Concord Medical. But when comparing it to its historical volatility, Brookdale Senior Living is 5.2 times less risky than Concord Medical. It trades about 0.09 of its potential returns per unit of risk. Concord Medical Services is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Concord Medical Services on January 25, 2024 and sell it today you would earn a total of 16.01 from holding Concord Medical Services or generate 39.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brookdale Senior Living vs. Concord Medical Services
Performance |
| Timeline |
| Brookdale Senior Living |
| Concord Medical Services |
Brookdale Senior and Concord Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Concord Medical
The main advantage of trading using opposite Brookdale Senior and Concord Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Concord Medical 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 Concord Medical will offset losses from the drop in Concord Medical's long position.| Brookdale Senior vs. The Ensign Group | Brookdale Senior vs. Community Health Systems | Brookdale Senior vs. National HealthCare | Brookdale Senior vs. Mednax Inc |
| Concord Medical vs. Pennant Group | Concord Medical vs. Encompass Health Corp | Concord Medical vs. Enhabit | Concord Medical vs. National HealthCare |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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