Correlation Between Agilon Health and Brookdale Senior

Can any of the company-specific risk be diversified away by investing in both Agilon Health and Brookdale Senior 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 Agilon Health and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between agilon health and Brookdale Senior Living, you can compare the effects of market volatilities on Agilon Health and Brookdale Senior 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 Agilon Health with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilon Health and Brookdale Senior.

Diversification Opportunities for Agilon Health and Brookdale Senior

-0.28

Correlation Coefficient

Agilon Health  Brookdale Senior

Very good diversification

The 3 months correlation between Agilon and Brookdale is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding agilon health and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living and Agilon Health 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 agilon health are associated (or correlated) with Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of Agilon Health i.e., Agilon Health and Brookdale Senior go up and down completely randomly.

Pair Corralation between Agilon Health and Brookdale Senior

Considering the 90-day investment horizon agilon health is expected to generate 2.15 times more return on investment than Brookdale Senior. However, Agilon Health is 2.15 times more volatile than Brookdale Senior Living. It trades about 0.18 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about 0.03 per unit of risk. If you would invest  209.00  in agilon health on November 29, 2024 and sell it today you would earn a total of  127.00  from holding agilon health or generate 60.77% return on investment over 90 days.

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

agilon health  vs.  Brookdale Senior Living

agilon health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in agilon health are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Agilon Health disclosed solid returns over the last few months and may actually be approaching a breakup point.

Brookdale Senior Living

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookdale Senior Living are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Brookdale Senior is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Agilon Health and Brookdale Senior

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

The idea behind agilon health and Brookdale Senior Living 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.