Correlation Between Enhabit and Sector 10

Can any of the company-specific risk be diversified away by investing in both Enhabit and Sector 10 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 Enhabit and Sector 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enhabit and Sector 10, you can compare the effects of market volatilities on Enhabit and Sector 10 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 Enhabit with a short position of Sector 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhabit and Sector 10.

Diversification Opportunities for Enhabit and Sector 10

-0.52

Correlation Coefficient

Enhabit  Sector 10

Excellent diversification

The 3 months correlation between Enhabit and Sector is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and Sector 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sector 10 and Enhabit 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 Enhabit are associated (or correlated) with Sector 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sector 10 has no effect on the direction of Enhabit i.e., Enhabit and Sector 10 go up and down completely randomly.

Pair Corralation between Enhabit and Sector 10

If you would invest  0.01  in Sector 10 on February 1, 2024 and sell it today you would earn a total of  0.00  from holding Sector 10 or generate 0.0% return on investment over 90 days.

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

Enhabit  vs.  Sector 10

Enhabit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enhabit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enhabit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sector 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sector 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Enhabit and Sector 10

The main advantage of trading using opposite Enhabit and Sector 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit position performs unexpectedly, Sector 10 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 Sector 10 will offset losses from the drop in Sector 10's long position.

The idea behind Enhabit and Sector 10 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.