Correlation Between Milestone Scientific and Enhabit

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

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

Diversification Opportunities for Milestone Scientific and Enhabit

0.61

Correlation Coefficient

Milestone Scientific  Enhabit

Poor diversification

The 3 months correlation between Milestone and Enhabit is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Milestone Scientific and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit and Milestone Scientific 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 Milestone Scientific are associated (or correlated) with Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of Milestone Scientific i.e., Milestone Scientific and Enhabit go up and down completely randomly.

Pair Corralation between Milestone Scientific and Enhabit

Given the investment horizon of 90 days Milestone Scientific is expected to generate 1.6 times more return on investment than Enhabit. However, Milestone Scientific is 1.6 times more volatile than Enhabit. It trades about 0.05 of its potential returns per unit of risk. Enhabit is currently generating about -0.05 per unit of risk. If you would invest  55.00  in Milestone Scientific on August 17, 2024 and sell it today you would earn a total of  13.00  from holding Milestone Scientific or generate 23.64% return on investment over 90 days.

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

Milestone Scientific  vs.  Enhabit

Milestone Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Milestone Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Milestone Scientific and Enhabit

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

The idea behind Milestone Scientific and Enhabit 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.