Correlation Between Brookdale Senior and Chemed Corp
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Chemed Corp 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 Chemed Corp 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 Chemed Corp, you can compare the effects of market volatilities on Brookdale Senior and Chemed Corp 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 Chemed Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Chemed Corp.
Diversification Opportunities for Brookdale Senior and Chemed Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookdale and Chemed is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed Corp 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 Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Chemed Corp go up and down completely randomly.
Pair Corralation between Brookdale Senior and Chemed Corp
Considering the 90-day investment horizon Brookdale Senior Living is expected to generate 3.19 times more return on investment than Chemed Corp. However, Brookdale Senior is 3.19 times more volatile than Chemed Corp. It trades about 0.02 of its potential returns per unit of risk. Chemed Corp is currently generating about 0.04 per unit of risk. If you would invest 617.00 in Brookdale Senior Living on January 20, 2024 and sell it today you would earn a total of 31.00 from holding Brookdale Senior Living or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Brookdale Senior Living vs. Chemed Corp
Performance |
| Timeline |
| Brookdale Senior Living |
| Chemed Corp |
Brookdale Senior and Chemed Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Chemed Corp
The main advantage of trading using opposite Brookdale Senior and Chemed Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Chemed Corp 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 Chemed Corp will offset losses from the drop in Chemed Corp's long position.| Brookdale Senior vs. Certara | Brookdale Senior vs. HealthStream | Brookdale Senior vs. Evolent Health | Brookdale Senior vs. Streamline Health Solutions |
| Chemed Corp vs. Certara | Chemed Corp vs. HealthStream | Chemed Corp vs. Evolent Health | Chemed Corp vs. Streamline Health Solutions |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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