Correlation Between DocGo and Encompass Health
Can any of the company-specific risk be diversified away by investing in both DocGo 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 DocGo and Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DocGo Inc and Encompass Health Corp, you can compare the effects of market volatilities on DocGo 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 DocGo with a short position of Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DocGo and Encompass Health.
Diversification Opportunities for DocGo and Encompass Health
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DocGo and Encompass is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DocGo Inc 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 DocGo 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 DocGo Inc 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 DocGo i.e., DocGo and Encompass Health go up and down completely randomly.
Pair Corralation between DocGo and Encompass Health
Given the investment horizon of 90 days DocGo is expected to generate 1.37 times less return on investment than Encompass Health. In addition to that, DocGo is 2.86 times more volatile than Encompass Health Corp. It trades about 0.03 of its total potential returns per unit of risk. Encompass Health Corp is currently generating about 0.13 per unit of volatility. If you would invest 7,439 in Encompass Health Corp on September 1, 2024 and sell it today you would earn a total of 2,855 from holding Encompass Health Corp or generate 38.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DocGo Inc vs. Encompass Health Corp
Performance |
| Timeline |
| DocGo Inc |
| Encompass Health Corp |
DocGo and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DocGo and Encompass Health
The main advantage of trading using opposite DocGo and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DocGo 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.The idea behind DocGo Inc and Encompass Health Corp 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.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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