Correlation Between Ensign and HCA Holdings

Can any of the company-specific risk be diversified away by investing in both Ensign and HCA Holdings 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 HCA Holdings 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 HCA Holdings, you can compare the effects of market volatilities on Ensign and HCA Holdings 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 HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and HCA Holdings.

Diversification Opportunities for Ensign and HCA Holdings

0.51

Correlation Coefficient

Ensign  HCA Holdings

Very weak diversification

The 3 months correlation between Ensign and HCA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings 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 HCA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Holdings has no effect on the direction of Ensign i.e., Ensign and HCA Holdings go up and down completely randomly.

Pair Corralation between Ensign and HCA Holdings

Given the investment horizon of 90 days The Ensign Group is expected to generate 1.16 times more return on investment than HCA Holdings. However, Ensign is 1.16 times more volatile than HCA Holdings. It trades about 0.15 of its potential returns per unit of risk. HCA Holdings is currently generating about 0.04 per unit of risk. If you would invest  13,622  in The Ensign Group on May 8, 2025 and sell it today you would earn a total of  2,170  from holding The Ensign Group or generate 15.93% return on investment over 90 days.

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

The Ensign Group  vs.  HCA Holdings

Ensign Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Ensign Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Ensign reported solid returns over the last few months and may actually be approaching a breakup point.

HCA Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HCA Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ensign and HCA Holdings

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

The idea behind The Ensign Group and HCA Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.