Correlation Between Ensign and Community Health
Can any of the company-specific risk be diversified away by investing in both Ensign and Community Health 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 Community Health 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 Community Health Systems, you can compare the effects of market volatilities on Ensign and Community Health 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 Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Community Health.
Diversification Opportunities for Ensign and Community Health
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ensign and Community is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems 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 Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Ensign i.e., Ensign and Community Health go up and down completely randomly.
Pair Corralation between Ensign and Community Health
Given the investment horizon of 90 days The Ensign Group is expected to generate 0.45 times more return on investment than Community Health. However, The Ensign Group is 2.21 times less risky than Community Health. It trades about -0.14 of its potential returns per unit of risk. Community Health Systems is currently generating about -0.11 per unit of risk. If you would invest 12,327 in The Ensign Group on January 26, 2024 and sell it today you would lose (463.00) from holding The Ensign Group or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Ensign Group vs. Community Health Systems
Performance |
| Timeline |
| Ensign Group |
| Community Health Systems |
Ensign and Community Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Community Health
The main advantage of trading using opposite Ensign and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Community Health 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 Community Health will offset losses from the drop in Community Health's long position.| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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