Correlation Between Enhabit and LeMaitre Vascular

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

By analyzing existing cross correlation between Enhabit and LeMaitre Vascular, you can compare the effects of market volatilities on Enhabit and LeMaitre Vascular 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 LeMaitre Vascular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhabit and LeMaitre Vascular.

Diversification Opportunities for Enhabit and LeMaitre Vascular

-0.26

Correlation Coefficient

Enhabit  LeMaitre Vascular

Very good diversification

The 3 months correlation between Enhabit and LeMaitre is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and LeMaitre Vascular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeMaitre Vascular 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 LeMaitre Vascular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeMaitre Vascular has no effect on the direction of Enhabit i.e., Enhabit and LeMaitre Vascular go up and down completely randomly.

Pair Corralation between Enhabit and LeMaitre Vascular

Given the investment horizon of 90 days Enhabit is expected to generate 0.97 times more return on investment than LeMaitre Vascular. However, Enhabit is 1.03 times less risky than LeMaitre Vascular. It trades about 0.01 of its potential returns per unit of risk. LeMaitre Vascular is currently generating about -0.07 per unit of risk. If you would invest  777.00  in Enhabit on January 11, 2025 and sell it today you would lose (1.00) from holding Enhabit or give up 0.13% of portfolio value over 90 days.

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

Enhabit  vs.  LeMaitre Vascular

Enhabit

Risk-Adjusted Performance

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.

LeMaitre Vascular

Risk-Adjusted Performance

Very Weak

Over the last 90 days LeMaitre Vascular has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Enhabit and LeMaitre Vascular

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

The idea behind Enhabit and LeMaitre Vascular 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.