Correlation Between Embecta Corp and Enhabit
Can any of the company-specific risk be diversified away by investing in both Embecta Corp and Enhabit 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 Embecta Corp and Enhabit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embecta Corp and Enhabit, you can compare the effects of market volatilities on Embecta Corp and Enhabit 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 Embecta Corp with a short position of Enhabit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embecta Corp and Enhabit.
Diversification Opportunities for Embecta Corp and Enhabit
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Embecta and Enhabit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit and Embecta Corp 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 Embecta Corp are associated (or correlated) with Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of Embecta Corp i.e., Embecta Corp and Enhabit go up and down completely randomly.
Pair Corralation between Embecta Corp and Enhabit
Given the investment horizon of 90 days Embecta Corp is expected to generate 3.05 times more return on investment than Enhabit. However, Embecta Corp is 3.05 times more volatile than Enhabit. It trades about 0.24 of its potential returns per unit of risk. Enhabit is currently generating about 0.17 per unit of risk. If you would invest 1,447 in Embecta Corp on August 30, 2024 and sell it today you would earn a total of 612.00 from holding Embecta Corp or generate 42.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embecta Corp vs. Enhabit
Performance |
| Timeline |
| Embecta Corp |
| Enhabit |
Embecta Corp and Enhabit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embecta Corp and Enhabit
The main advantage of trading using opposite Embecta Corp and Enhabit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embecta Corp position performs unexpectedly, Enhabit 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 Enhabit will offset losses from the drop in Enhabit's long position.| Embecta Corp vs. Baxter International | Embecta Corp vs. West Pharmaceutical Services | Embecta Corp vs. ResMed Inc | Embecta Corp vs. The Cooper Companies, |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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