Correlation Between Ensign and Nova Leap
Can any of the company-specific risk be diversified away by investing in both Ensign and Nova Leap 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 Nova Leap 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 Nova Leap Health, you can compare the effects of market volatilities on Ensign and Nova Leap 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 Nova Leap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Nova Leap.
Diversification Opportunities for Ensign and Nova Leap
Weak diversification
The 3 months correlation between Ensign and Nova is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health 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 Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of Ensign i.e., Ensign and Nova Leap go up and down completely randomly.
Pair Corralation between Ensign and Nova Leap
Given the investment horizon of 90 days The Ensign Group is expected to generate 0.21 times more return on investment than Nova Leap. However, The Ensign Group is 4.82 times less risky than Nova Leap. It trades about 0.12 of its potential returns per unit of risk. Nova Leap Health is currently generating about 0.01 per unit of risk. If you would invest 11,966 in The Ensign Group on August 30, 2024 and sell it today you would earn a total of 2,668 from holding The Ensign Group or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Ensign Group vs. Nova Leap Health
Performance |
| Timeline |
| Ensign Group |
| Nova Leap Health |
Ensign and Nova Leap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Nova Leap
The main advantage of trading using opposite Ensign and Nova Leap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Nova Leap 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 Nova Leap will offset losses from the drop in Nova Leap's long position.| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
| Nova Leap vs. Ramsay Health Care | Nova Leap vs. Jack Nathan Medical | Nova Leap vs. Fresenius SE Co | Nova Leap vs. The Ensign Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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