Correlation Between Brookdale Senior and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC, you can compare the effects of market volatilities on Brookdale Senior and KENNAMETAL INC 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 KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and KENNAMETAL INC.
Diversification Opportunities for Brookdale Senior and KENNAMETAL INC
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookdale and KENNAMETAL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC 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 KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between Brookdale Senior and KENNAMETAL INC
Assuming the 90 days horizon Brookdale Senior Living is expected to generate 1.45 times more return on investment than KENNAMETAL INC. However, Brookdale Senior is 1.45 times more volatile than KENNAMETAL INC. It trades about 0.2 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about -0.02 per unit of risk. If you would invest 600.00 in Brookdale Senior Living on February 3, 2024 and sell it today you would earn a total of 50.00 from holding Brookdale Senior Living or generate 8.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Brookdale Senior Living vs. KENNAMETAL INC
Performance |
Timeline |
Brookdale Senior Living |
KENNAMETAL INC |
Brookdale Senior and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brookdale Senior and KENNAMETAL INC
The main advantage of trading using opposite Brookdale Senior and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.Brookdale Senior vs. Jacquet Metal Service | Brookdale Senior vs. BRIT AMER TOBACCO | Brookdale Senior vs. Aluminum of | Brookdale Senior vs. IMPERIAL TOBACCO |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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