Correlation Between Enhabit and MSP Recovery

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

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

Diversification Opportunities for Enhabit and MSP Recovery

-0.25

Correlation Coefficient

Enhabit  MSP Recovery

Very good diversification

The 3 months correlation between Enhabit and MSP is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery 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 MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Enhabit i.e., Enhabit and MSP Recovery go up and down completely randomly.

Pair Corralation between Enhabit and MSP Recovery

Given the investment horizon of 90 days Enhabit is expected to under-perform the MSP Recovery. But the stock apears to be less risky and, when comparing its historical volatility, Enhabit is 3.19 times less risky than MSP Recovery. The stock trades about -0.07 of its potential returns per unit of risk. The MSP Recovery is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.33  in MSP Recovery on May 5, 2025 and sell it today you would lose (0.12) from holding MSP Recovery or give up 36.36% of portfolio value over 90 days.

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

Enhabit  vs.  MSP Recovery

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 fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

MSP Recovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days MSP Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MSP Recovery is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enhabit and MSP Recovery

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

The idea behind Enhabit and MSP Recovery 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.