Correlation Between Owens Minor and Brookdale Senior

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

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

Diversification Opportunities for Owens Minor and Brookdale Senior

-0.23

Correlation Coefficient

Owens Minor  Brookdale Senior

Very good diversification

The 3 months correlation between Owens and Brookdale is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Owens Minor 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 Owens Minor 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 Owens Minor 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 Owens Minor i.e., Owens Minor and Brookdale Senior go up and down completely randomly.

Pair Corralation between Owens Minor and Brookdale Senior

Considering the 90-day investment horizon Owens Minor is expected to under-perform the Brookdale Senior. In addition to that, Owens Minor is 1.02 times more volatile than Brookdale Senior Living. It trades about -0.01 of its total potential returns per unit of risk. Brookdale Senior Living is currently generating about 0.03 per unit of volatility. If you would invest  568.00  in Brookdale Senior Living on February 21, 2024 and sell it today you would earn a total of  118.00  from holding Brookdale Senior Living or generate 20.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Owens Minor  vs.  Brookdale Senior Living

Owens Minor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Owens Minor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Brookdale Senior Living

Risk-Adjusted Performance

11 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookdale Senior Living are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking signals, Brookdale Senior exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Owens Minor and Brookdale Senior

The main advantage of trading using opposite Owens Minor and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owens Minor 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 Owens Minor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.