Correlation Between Brookdale Senior and Humana
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Humana 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 Humana 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 Humana Inc, you can compare the effects of market volatilities on Brookdale Senior and Humana 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 Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Humana.
Diversification Opportunities for Brookdale Senior and Humana
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brookdale and Humana is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana 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 Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Humana go up and down completely randomly.
Pair Corralation between Brookdale Senior and Humana
Considering the 90-day investment horizon Brookdale Senior Living is expected to generate 1.18 times more return on investment than Humana. However, Brookdale Senior is 1.18 times more volatile than Humana Inc. It trades about 0.15 of its potential returns per unit of risk. Humana Inc is currently generating about 0.05 per unit of risk. If you would invest 494.00 in Brookdale Senior Living on December 28, 2024 and sell it today you would earn a total of 121.00 from holding Brookdale Senior Living or generate 24.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Brookdale Senior Living vs. Humana Inc
Performance |
Timeline |
Brookdale Senior Living |
Humana Inc |
Brookdale Senior and Humana Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brookdale Senior and Humana
The main advantage of trading using opposite Brookdale Senior and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Humana 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 Humana will offset losses from the drop in Humana's long position.Brookdale Senior vs. The Ensign Group | Brookdale Senior vs. Community Health Systems | Brookdale Senior vs. National HealthCare | Brookdale Senior vs. Mednax Inc |
Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |