Correlation Between Ensign and EDAP TMS
Can any of the company-specific risk be diversified away by investing in both Ensign and EDAP TMS 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 EDAP TMS 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 EDAP TMS SA, you can compare the effects of market volatilities on Ensign and EDAP TMS 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 EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and EDAP TMS.
Diversification Opportunities for Ensign and EDAP TMS
Poor diversification
The 3 months correlation between Ensign and EDAP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA 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 EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Ensign i.e., Ensign and EDAP TMS go up and down completely randomly.
Pair Corralation between Ensign and EDAP TMS
Given the investment horizon of 90 days The Ensign Group is expected to generate 0.36 times more return on investment than EDAP TMS. However, The Ensign Group is 2.8 times less risky than EDAP TMS. It trades about 0.06 of its potential returns per unit of risk. EDAP TMS SA is currently generating about -0.09 per unit of risk. If you would invest 11,496 in The Ensign Group on October 20, 2024 and sell it today you would earn a total of 2,183 from holding The Ensign Group or generate 18.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Ensign Group vs. EDAP TMS SA
Performance |
| Timeline |
| Ensign Group |
| EDAP TMS SA |
Ensign and EDAP TMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and EDAP TMS
The main advantage of trading using opposite Ensign and EDAP TMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, EDAP TMS 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 EDAP TMS will offset losses from the drop in EDAP TMS's long position.| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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