Correlation Between Acadia Healthcare and Plexus Corp

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

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

Diversification Opportunities for Acadia Healthcare and Plexus Corp

-0.25

Correlation Coefficient

Acadia Healthcare  Plexus Corp

Very good diversification

The 3 months correlation between Acadia and Plexus is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp 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 Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and Plexus Corp go up and down completely randomly.

Pair Corralation between Acadia Healthcare and Plexus Corp

If you would invest  0.00  in Plexus Corp on October 27, 2024 and sell it today you would earn a total of  0.00  from holding Plexus Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Acadia Healthcare  vs.  Plexus Corp

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.

Plexus Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Plexus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Plexus Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Acadia Healthcare and Plexus Corp

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

The idea behind Acadia Healthcare and Plexus Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.