Correlation Between Encompass Health and Concentra Group
Can any of the company-specific risk be diversified away by investing in both Encompass Health and Concentra Group 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 Concentra Group 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 Concentra Group Holdings, you can compare the effects of market volatilities on Encompass Health and Concentra Group 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 Concentra Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encompass Health and Concentra Group.
Diversification Opportunities for Encompass Health and Concentra Group
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encompass and Concentra is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Encompass Health Corp and Concentra Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concentra Group Holdings 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 Concentra Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concentra Group Holdings has no effect on the direction of Encompass Health i.e., Encompass Health and Concentra Group go up and down completely randomly.
Pair Corralation between Encompass Health and Concentra Group
Considering the 90-day investment horizon Encompass Health Corp is expected to generate 0.68 times more return on investment than Concentra Group. However, Encompass Health Corp is 1.48 times less risky than Concentra Group. It trades about 0.09 of its potential returns per unit of risk. Concentra Group Holdings is currently generating about -0.05 per unit of risk. If you would invest 5,792 in Encompass Health Corp on September 12, 2024 and sell it today you would earn a total of 4,337 from holding Encompass Health Corp or generate 74.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 19.8% |
| Values | Daily Returns |
Encompass Health Corp vs. Concentra Group Holdings
Performance |
| Timeline |
| Encompass Health Corp |
| Concentra Group Holdings |
Encompass Health and Concentra Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encompass Health and Concentra Group
The main advantage of trading using opposite Encompass Health and Concentra Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encompass Health position performs unexpectedly, Concentra Group 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 Concentra Group will offset losses from the drop in Concentra Group's long position.| Encompass Health vs. Pennant Group | Encompass Health vs. The Ensign Group | Encompass Health vs. InnovAge Holding Corp | Encompass Health vs. ModivCare |
| Concentra Group vs. Encompass Health Corp | Concentra Group vs. Pennant Group | Concentra Group vs. Acadia Healthcare | Concentra Group vs. Select Medical Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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