Correlation Between Ensign and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Ensign and Dow Jones 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 Ensign and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Ensign Group and Dow Jones Industrial, you can compare the effects of market volatilities on Ensign and Dow Jones 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 Ensign with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Dow Jones.
Diversification Opportunities for Ensign and Dow Jones
Very good diversification
The 3 months correlation between Ensign and Dow is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Ensign 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 The Ensign Group are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Ensign i.e., Ensign and Dow Jones go up and down completely randomly.
Pair Corralation between Ensign and Dow Jones
Given the investment horizon of 90 days The Ensign Group is expected to generate 2.03 times more return on investment than Dow Jones. However, Ensign is 2.03 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 9,286 in The Ensign Group on August 31, 2024 and sell it today you would earn a total of 5,335 from holding The Ensign Group or generate 57.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Ensign Group vs. Dow Jones Industrial
Performance |
| Timeline |
Ensign and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
The Ensign Group
Pair trading matchups for Ensign
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Ensign and Dow Jones
The main advantage of trading using opposite Ensign and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Ensign vs. Acadia Healthcare | Ensign vs. Select Medical Holdings | Ensign vs. Universal Health Services | Ensign vs. Prestige Brand Holdings |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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