Correlation Between Brookdale Senior and ASGN

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

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

Diversification Opportunities for Brookdale Senior and ASGN

0.69

Correlation Coefficient

Brookdale Senior  ASGN

Poor diversification

The 3 months correlation between Brookdale and ASGN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and ASGN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASGN Inc and Brookdale Senior 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 Brookdale Senior Living are associated (or correlated) with ASGN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASGN Inc has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and ASGN go up and down completely randomly.

Pair Corralation between Brookdale Senior and ASGN

Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the ASGN. In addition to that, Brookdale Senior is 1.4 times more volatile than ASGN Inc. It trades about -0.13 of its total potential returns per unit of risk. ASGN Inc is currently generating about -0.07 per unit of volatility. If you would invest  9,322  in ASGN Inc on October 1, 2024 and sell it today you would lose (953.00) from holding ASGN Inc or give up 10.22% of portfolio value over 90 days.

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

Brookdale Senior Living  vs.  ASGN Inc

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.

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Brookdale Senior and ASGN

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

The idea behind Brookdale Senior Living and ASGN Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.