Correlation Between Acadia Healthcare and WESANA HEALTH

Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and WESANA 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 Acadia Healthcare and WESANA HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acadia Healthcare and WESANA HEALTH HOLD, you can compare the effects of market volatilities on Acadia Healthcare and WESANA 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 Acadia Healthcare with a short position of WESANA HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and WESANA HEALTH.

Diversification Opportunities for Acadia Healthcare and WESANA HEALTH

0.0

Correlation Coefficient

Acadia Healthcare  WESANA HEALTH

Pay attention - limited upside

The 3 months correlation between Acadia and WESANA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and WESANA HEALTH HOLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESANA HEALTH HOLD and Acadia Healthcare 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 Acadia Healthcare are associated (or correlated) with WESANA HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESANA HEALTH HOLD has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and WESANA HEALTH go up and down completely randomly.

Pair Corralation between Acadia Healthcare and WESANA HEALTH

If you would invest  0.15  in WESANA HEALTH HOLD on October 26, 2024 and sell it today you would earn a total of  0.00  from holding WESANA HEALTH HOLD or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Acadia Healthcare  vs.  WESANA HEALTH HOLD

Acadia Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acadia Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WESANA HEALTH HOLD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESANA HEALTH HOLD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WESANA HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acadia Healthcare and WESANA HEALTH

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

The idea behind Acadia Healthcare and WESANA HEALTH HOLD 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.