Correlation Between Brookdale Senior and LivaNova PLC

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

Diversification Opportunities for Brookdale Senior and LivaNova PLC

-0.02

Correlation Coefficient

Brookdale Senior  LivaNova PLC

Good diversification

The 3 months correlation between Brookdale and LivaNova is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC 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 LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and LivaNova PLC go up and down completely randomly.

Pair Corralation between Brookdale Senior and LivaNova PLC

Considering the 90-day investment horizon Brookdale Senior Living is expected to generate 1.12 times more return on investment than LivaNova PLC. However, Brookdale Senior is 1.12 times more volatile than LivaNova PLC. It trades about 0.13 of its potential returns per unit of risk. LivaNova PLC is currently generating about -0.02 per unit of risk. If you would invest  666.00  in Brookdale Senior Living on May 8, 2025 and sell it today you would earn a total of  107.00  from holding Brookdale Senior Living or generate 16.07% 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.  LivaNova PLC

Brookdale Senior Living

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Brookdale Senior Living are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking signals, Brookdale Senior exhibited solid returns over the last few months and may actually be approaching a breakup point.

LivaNova PLC

Risk-Adjusted Performance

Weakest

Over the last 90 days LivaNova PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, LivaNova PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brookdale Senior and LivaNova PLC

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

The idea behind Brookdale Senior Living and LivaNova PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.