Correlation Between Ensign and Apple
Can any of the company-specific risk be diversified away by investing in both Ensign and Apple 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 Ensign and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Ensign Group and Apple Inc, you can compare the effects of market volatilities on Ensign and Apple 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 Ensign with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Apple.
Diversification Opportunities for Ensign and Apple
Excellent diversification
The 3 months correlation between Ensign and Apple is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Ensign 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 The Ensign Group are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Ensign i.e., Ensign and Apple go up and down completely randomly.
Pair Corralation between Ensign and Apple
Assuming the 90 days horizon The Ensign Group is expected to generate 0.99 times more return on investment than Apple. However, The Ensign Group is 1.01 times less risky than Apple. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.02 per unit of risk. If you would invest 7,709 in The Ensign Group on January 19, 2024 and sell it today you would earn a total of 3,291 from holding The Ensign Group or generate 42.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Ensign Group vs. Apple Inc
Performance |
| Timeline |
| Ensign Group |
| Apple Inc |
Ensign and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Apple
The main advantage of trading using opposite Ensign and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Ensign vs. Sportsmans Warehouse Holdings | Ensign vs. Live Nation Entertainment | Ensign vs. ZINC MEDIA GR | Ensign vs. Flutter Entertainment PLC |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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