Correlation Between Centene Corp and Brookdale Senior

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

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

Diversification Opportunities for Centene Corp and Brookdale Senior

-0.5

Correlation Coefficient

Centene Corp  Brookdale Senior

Very good diversification

The 3 months correlation between Centene and Brookdale is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp 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 Centene Corp 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 Centene Corp 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 Centene Corp i.e., Centene Corp and Brookdale Senior go up and down completely randomly.

Pair Corralation between Centene Corp and Brookdale Senior

Considering the 90-day investment horizon Centene Corp is expected to under-perform the Brookdale Senior. But the stock apears to be less risky and, when comparing its historical volatility, Centene Corp is 1.17 times less risky than Brookdale Senior. The stock trades about -0.02 of its potential returns per unit of risk. The Brookdale Senior Living is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  558.00  in Brookdale Senior Living on December 1, 2024 and sell it today you would earn a total of  12.00  from holding Brookdale Senior Living or generate 2.15% return on investment over 90 days.

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

Centene Corp  vs.  Brookdale Senior Living

Centene Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Centene Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Centene Corp and Brookdale Senior

The main advantage of trading using opposite Centene Corp and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp 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 Centene Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.