Correlation Between Brilliant Earth and Aveanna Healthcare

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

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

Diversification Opportunities for Brilliant Earth and Aveanna Healthcare

0.03

Correlation Coefficient

Brilliant Earth  Aveanna Healthcare

Significant diversification

The 3 months correlation between Brilliant and Aveanna is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Aveanna Healthcare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveanna Healthcare and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with Aveanna Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveanna Healthcare has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Aveanna Healthcare go up and down completely randomly.

Pair Corralation between Brilliant Earth and Aveanna Healthcare

Given the investment horizon of 90 days Brilliant Earth Group is expected to generate 1.07 times more return on investment than Aveanna Healthcare. However, Brilliant Earth is 1.07 times more volatile than Aveanna Healthcare Holdings. It trades about 0.06 of its potential returns per unit of risk. Aveanna Healthcare Holdings is currently generating about 0.0 per unit of risk. If you would invest  180.00  in Brilliant Earth Group on September 5, 2024 and sell it today you would earn a total of  21.00  from holding Brilliant Earth Group or generate 11.67% return on investment over 90 days.

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

Brilliant Earth Group  vs.  Aveanna Healthcare Holdings

Brilliant Earth Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brilliant Earth Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Brilliant Earth unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong basic indicators, Aveanna Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Brilliant Earth and Aveanna Healthcare

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

The idea behind Brilliant Earth Group and Aveanna Healthcare Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.