Correlation Between Concord Medical and Encompass Health
Can any of the company-specific risk be diversified away by investing in both Concord Medical and Encompass Health 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 Concord Medical and Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Concord Medical Services and Encompass Health Corp, you can compare the effects of market volatilities on Concord Medical and Encompass Health 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 Concord Medical with a short position of Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Medical and Encompass Health.
Diversification Opportunities for Concord Medical and Encompass Health
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Concord and Encompass is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Concord Medical Services and Encompass Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encompass Health Corp and Concord Medical 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 Concord Medical Services are associated (or correlated) with Encompass Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encompass Health Corp has no effect on the direction of Concord Medical i.e., Concord Medical and Encompass Health go up and down completely randomly.
Pair Corralation between Concord Medical and Encompass Health
Considering the 90-day investment horizon Concord Medical Services is expected to under-perform the Encompass Health. In addition to that, Concord Medical is 3.84 times more volatile than Encompass Health Corp. It trades about -0.21 of its total potential returns per unit of risk. Encompass Health Corp is currently generating about 0.23 per unit of volatility. If you would invest 9,309 in Encompass Health Corp on August 28, 2024 and sell it today you would earn a total of 891.00 from holding Encompass Health Corp or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Concord Medical Services vs. Encompass Health Corp
Performance |
| Timeline |
| Concord Medical Services |
| Encompass Health Corp |
Concord Medical and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Concord Medical and Encompass Health
The main advantage of trading using opposite Concord Medical and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concord Medical position performs unexpectedly, Encompass Health 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 Encompass Health will offset losses from the drop in Encompass Health's long position.| Concord Medical vs. Pennant Group | Concord Medical vs. Encompass Health Corp | Concord Medical vs. Enhabit | Concord Medical vs. National HealthCare |
| Encompass Health vs. Pennant Group | Encompass Health vs. The Ensign Group | Encompass Health vs. InnovAge Holding Corp | Encompass Health vs. ModivCare |
Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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