Correlation Between American Shared and Brookdale Senior

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

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

Diversification Opportunities for American Shared and Brookdale Senior

-0.25

Correlation Coefficient

American Shared  Brookdale Senior

Very good diversification

The 3 months correlation between American and Brookdale is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Shared Hospital 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 American Shared 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 American Shared Hospital 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 American Shared i.e., American Shared and Brookdale Senior go up and down completely randomly.

Pair Corralation between American Shared and Brookdale Senior

Considering the 90-day investment horizon American Shared Hospital is expected to generate 0.98 times more return on investment than Brookdale Senior. However, American Shared Hospital is 1.02 times less risky than Brookdale Senior. It trades about 0.04 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about -0.14 per unit of risk. If you would invest  305.00  in American Shared Hospital on September 30, 2024 and sell it today you would earn a total of  14.00  from holding American Shared Hospital or generate 4.59% return on investment over 90 days.

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

American Shared Hospital  vs.  Brookdale Senior Living

American Shared Hospital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Shared Hospital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, American Shared may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Brookdale Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookdale Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals 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.

Pair Trading with American Shared and Brookdale Senior

The main advantage of trading using opposite American Shared and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shared 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 American Shared Hospital 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.