Correlation Between Acadia Healthcare and Lifestance Health

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

Diversification Opportunities for Acadia Healthcare and Lifestance Health

-0.61

Correlation Coefficient

Acadia Healthcare  Lifestance Health

Excellent diversification

The 3 months correlation between Acadia and Lifestance is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health 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 Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and Lifestance Health go up and down completely randomly.

Pair Corralation between Acadia Healthcare and Lifestance Health

Given the investment horizon of 90 days Acadia Healthcare is expected to under-perform the Lifestance Health. In addition to that, Acadia Healthcare is 1.93 times more volatile than Lifestance Health Group. It trades about -0.25 of its total potential returns per unit of risk. Lifestance Health Group is currently generating about 0.04 per unit of volatility. If you would invest  690.00  in Lifestance Health Group on September 12, 2024 and sell it today you would earn a total of  28.00  from holding Lifestance Health Group or generate 4.06% return on investment over 90 days.

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

Acadia Healthcare  vs.  Lifestance Health Group

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. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lifestance Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifestance Health Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lifestance Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Acadia Healthcare and Lifestance Health

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

The idea behind Acadia Healthcare and Lifestance Health Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.