Correlation Between Aveanna Healthcare and American Shared

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

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

Diversification Opportunities for Aveanna Healthcare and American Shared

-0.22

Correlation Coefficient

Aveanna Healthcare  American Shared

Very good diversification

The 3 months correlation between Aveanna and American is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Aveanna Healthcare Holdings and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital and Aveanna 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 Aveanna Healthcare Holdings are associated (or correlated) with American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of Aveanna Healthcare i.e., Aveanna Healthcare and American Shared go up and down completely randomly.

Pair Corralation between Aveanna Healthcare and American Shared

Given the investment horizon of 90 days Aveanna Healthcare Holdings is expected to generate 1.62 times more return on investment than American Shared. However, Aveanna Healthcare is 1.62 times more volatile than American Shared Hospital. It trades about 0.02 of its potential returns per unit of risk. American Shared Hospital is currently generating about 0.01 per unit of risk. If you would invest  454.00  in Aveanna Healthcare Holdings on September 21, 2024 and sell it today you would lose (9.00) from holding Aveanna Healthcare Holdings or give up 1.98% of portfolio value over 90 days.

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

Aveanna Healthcare Holdings  vs.  American Shared Hospital

Aveanna Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aveanna Healthcare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 unfluctuating primary indicators, American Shared may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aveanna Healthcare and American Shared

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

The idea behind Aveanna Healthcare Holdings and American Shared Hospital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.