Correlation Between Ensign and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Ensign 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 Ensign and Brookdale Senior 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 Brookdale Senior Living, you can compare the effects of market volatilities on Ensign 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 Ensign with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Brookdale Senior.
Diversification Opportunities for Ensign and Brookdale Senior
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ensign and Brookdale is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group 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 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 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 Ensign i.e., Ensign and Brookdale Senior go up and down completely randomly.
Pair Corralation between Ensign and Brookdale Senior
Given the investment horizon of 90 days The Ensign Group is expected to under-perform the Brookdale Senior. But the stock apears to be less risky and, when comparing its historical volatility, The Ensign Group is 1.89 times less risky than Brookdale Senior. The stock trades about -0.14 of its potential returns per unit of risk. The Brookdale Senior Living is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 610.00 in Brookdale Senior Living on January 18, 2024 and sell it today you would earn a total of 36.00 from holding Brookdale Senior Living or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Ensign Group vs. Brookdale Senior Living
Performance |
| Timeline |
| Ensign Group |
| Brookdale Senior Living |
Ensign and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Brookdale Senior
The main advantage of trading using opposite Ensign and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign 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.| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
| Brookdale Senior vs. The Ensign Group | Brookdale Senior vs. Community Health Systems | Brookdale Senior vs. National HealthCare | Brookdale Senior vs. Mednax Inc |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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