Correlation Between Encompass Health and AMN Healthcare
Can any of the company-specific risk be diversified away by investing in both Encompass Health and AMN Healthcare 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 Encompass Health and AMN Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encompass Health Corp and AMN Healthcare Services, you can compare the effects of market volatilities on Encompass Health and AMN Healthcare 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 Encompass Health with a short position of AMN Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encompass Health and AMN Healthcare.
Diversification Opportunities for Encompass Health and AMN Healthcare
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Encompass and AMN is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Encompass Health Corp and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services and Encompass Health 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 Encompass Health Corp are associated (or correlated) with AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Encompass Health i.e., Encompass Health and AMN Healthcare go up and down completely randomly.
Pair Corralation between Encompass Health and AMN Healthcare
Considering the 90-day investment horizon Encompass Health Corp is expected to generate 0.45 times more return on investment than AMN Healthcare. However, Encompass Health Corp is 2.23 times less risky than AMN Healthcare. It trades about 0.09 of its potential returns per unit of risk. AMN Healthcare Services is currently generating about -0.08 per unit of risk. If you would invest 5,662 in Encompass Health Corp on August 24, 2024 and sell it today you would earn a total of 4,450 from holding Encompass Health Corp or generate 78.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encompass Health Corp vs. AMN Healthcare Services
Performance |
| Timeline |
| Encompass Health Corp |
| AMN Healthcare Services |
Encompass Health and AMN Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encompass Health and AMN Healthcare
The main advantage of trading using opposite Encompass Health and AMN Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encompass Health position performs unexpectedly, AMN Healthcare 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 AMN Healthcare will offset losses from the drop in AMN Healthcare's long position.| Encompass Health vs. Pennant Group | Encompass Health vs. The Ensign Group | Encompass Health vs. InnovAge Holding Corp | Encompass Health vs. ModivCare |
| AMN Healthcare vs. Option Care Health | AMN Healthcare vs. Addus HomeCare | AMN Healthcare vs. Acadia Healthcare | AMN Healthcare vs. Encompass Health 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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