Correlation Between Enhabit and NeuroMetrix
Can any of the company-specific risk be diversified away by investing in both Enhabit and NeuroMetrix 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 NeuroMetrix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhabit and NeuroMetrix, you can compare the effects of market volatilities on Enhabit and NeuroMetrix 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 NeuroMetrix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhabit and NeuroMetrix.
Diversification Opportunities for Enhabit and NeuroMetrix
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enhabit and NeuroMetrix is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and NeuroMetrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeuroMetrix 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 NeuroMetrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeuroMetrix has no effect on the direction of Enhabit i.e., Enhabit and NeuroMetrix go up and down completely randomly.
Pair Corralation between Enhabit and NeuroMetrix
Given the investment horizon of 90 days Enhabit is expected to under-perform the NeuroMetrix. But the stock apears to be less risky and, when comparing its historical volatility, Enhabit is 1.24 times less risky than NeuroMetrix. The stock trades about -0.03 of its potential returns per unit of risk. The NeuroMetrix is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 383.00 in NeuroMetrix on September 3, 2024 and sell it today you would earn a total of 44.00 from holding NeuroMetrix or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhabit vs. NeuroMetrix
Performance |
| Timeline |
| Enhabit |
| NeuroMetrix |
Enhabit and NeuroMetrix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhabit and NeuroMetrix
The main advantage of trading using opposite Enhabit and NeuroMetrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit position performs unexpectedly, NeuroMetrix 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 NeuroMetrix will offset losses from the drop in NeuroMetrix's long position.| Enhabit vs. Select Medical Holdings | Enhabit vs. Encompass Health Corp | Enhabit vs. Pennant Group | Enhabit vs. Acadia Healthcare |
| NeuroMetrix vs. Heart Test Laboratories | NeuroMetrix vs. ReShape Lifesciences | NeuroMetrix vs. Inspira Technologies Oxy | NeuroMetrix vs. Bone Biologics Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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