Correlation Between Brookdale Senior and Agilon Health

Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Agilon Health 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 Agilon Health 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 agilon health, you can compare the effects of market volatilities on Brookdale Senior and Agilon Health 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 Agilon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Agilon Health.

Diversification Opportunities for Brookdale Senior and Agilon Health

0.86

Correlation Coefficient

Brookdale Senior  Agilon Health

Very poor diversification

The 3 months correlation between Brookdale and Agilon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and agilon health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on agilon health 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 Agilon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of agilon health has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Agilon Health go up and down completely randomly.

Pair Corralation between Brookdale Senior and Agilon Health

Considering the 90-day investment horizon Brookdale Senior Living is expected to generate 0.59 times more return on investment than Agilon Health. However, Brookdale Senior Living is 1.7 times less risky than Agilon Health. It trades about 0.06 of its potential returns per unit of risk. agilon health is currently generating about -0.1 per unit of risk. If you would invest  425.00  in Brookdale Senior Living on July 26, 2024 and sell it today you would earn a total of  191.00  from holding Brookdale Senior Living or generate 44.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Brookdale Senior Living  vs.  agilon health

Brookdale Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookdale Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

agilon health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days agilon health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in November 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Brookdale Senior and Agilon Health

The main advantage of trading using opposite Brookdale Senior and Agilon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Agilon Health 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 Agilon Health will offset losses from the drop in Agilon Health's long position.

The idea behind Brookdale Senior Living and agilon health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.