Correlation Between Concentra Group and Encompass Health
Can any of the company-specific risk be diversified away by investing in both Concentra Group 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 Concentra Group and Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Concentra Group Holdings and Encompass Health Corp, you can compare the effects of market volatilities on Concentra Group 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 Concentra Group with a short position of Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concentra Group and Encompass Health.
Diversification Opportunities for Concentra Group and Encompass Health
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Concentra and Encompass is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Concentra Group Holdings 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 Concentra Group 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 Concentra Group Holdings 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 Concentra Group i.e., Concentra Group and Encompass Health go up and down completely randomly.
Pair Corralation between Concentra Group and Encompass Health
Considering the 90-day investment horizon Concentra Group Holdings is expected to under-perform the Encompass Health. In addition to that, Concentra Group is 1.6 times more volatile than Encompass Health Corp. It trades about -0.04 of its total potential returns per unit of risk. Encompass Health Corp is currently generating about 0.1 per unit of volatility. If you would invest 6,927 in Encompass Health Corp on September 12, 2024 and sell it today you would earn a total of 3,240 from holding Encompass Health Corp or generate 46.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 29.61% |
| Values | Daily Returns |
Concentra Group Holdings vs. Encompass Health Corp
Performance |
| Timeline |
| Concentra Group Holdings |
| Encompass Health Corp |
Concentra Group and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Concentra Group and Encompass Health
The main advantage of trading using opposite Concentra Group and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concentra Group 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.| Concentra Group vs. Encompass Health Corp | Concentra Group vs. Pennant Group | Concentra Group vs. Acadia Healthcare | Concentra Group vs. Select Medical Holdings |
| 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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