Correlation Between Acadia Healthcare and EBay

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

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

Diversification Opportunities for Acadia Healthcare and EBay

-0.25

Correlation Coefficient

Acadia Healthcare  EBay

Very good diversification

The 3 months correlation between Acadia and EBay is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Acadia Healthcare 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 Acadia Healthcare are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and EBay go up and down completely randomly.

Pair Corralation between Acadia Healthcare and EBay

Assuming the 90 days horizon Acadia Healthcare is expected to under-perform the EBay. In addition to that, Acadia Healthcare is 2.45 times more volatile than eBay Inc. It trades about -0.01 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.21 per unit of volatility. If you would invest  5,904  in eBay Inc on April 25, 2025 and sell it today you would earn a total of  1,037  from holding eBay Inc or generate 17.56% return on investment over 90 days.

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

Acadia Healthcare  vs.  eBay Inc

Acadia Healthcare

Risk-Adjusted Performance

Weak

Over the last 90 days Acadia Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Acadia Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

eBay Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EBay reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acadia Healthcare and EBay

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

The idea behind Acadia Healthcare and eBay 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.