Correlation Between Enhabit and ModivCare

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Can any of the company-specific risk be diversified away by investing in both Enhabit and ModivCare 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 Enhabit and ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhabit and ModivCare, you can compare the effects of market volatilities on Enhabit and ModivCare 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 Enhabit with a short position of ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhabit and ModivCare.

Diversification Opportunities for Enhabit and ModivCare

EnhabitModivCareDiversified AwayEnhabitModivCareDiversified Away100%
-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Enhabit and ModivCare is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and Enhabit 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 Enhabit are associated (or correlated) with ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of Enhabit i.e., Enhabit and ModivCare go up and down completely randomly.

Pair Corralation between Enhabit and ModivCare

Given the investment horizon of 90 days Enhabit is expected to generate 5.37 times less return on investment than ModivCare. But when comparing it to its historical volatility, Enhabit is 3.58 times less risky than ModivCare. It trades about 0.01 of its potential returns per unit of risk. ModivCare is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  523.00  in ModivCare on November 25, 2024 and sell it today you would lose (18.00) from holding ModivCare or give up 3.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Enhabit  vs.  ModivCare

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-200
JavaScript chart by amCharts 3.21.15EHAB MODV
       Timeline  
Enhabit 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Enhabit are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Enhabit may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7.67.888.28.48.68.89
ModivCare 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ModivCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb468101214161820

Enhabit and ModivCare Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.16-6.11-4.06-2.010.03532.124.236.358.46 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15EHAB MODV
       Returns  

Pair Trading with Enhabit and ModivCare

The main advantage of trading using opposite Enhabit and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit position performs unexpectedly, ModivCare 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 ModivCare will offset losses from the drop in ModivCare's long position.
The idea behind Enhabit and ModivCare 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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