Correlation Between Ensign and Option Care
Can any of the company-specific risk be diversified away by investing in both Ensign and Option Care 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 Option Care 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 Option Care Health, you can compare the effects of market volatilities on Ensign and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Option Care.
Diversification Opportunities for Ensign and Option Care
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ensign and Option is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Ensign i.e., Ensign and Option Care go up and down completely randomly.
Pair Corralation between Ensign and Option Care
Given the investment horizon of 90 days The Ensign Group is expected to generate 0.6 times more return on investment than Option Care. However, The Ensign Group is 1.67 times less risky than Option Care. It trades about 0.08 of its potential returns per unit of risk. Option Care Health is currently generating about -0.01 per unit of risk. If you would invest 9,130 in The Ensign Group on August 24, 2024 and sell it today you would earn a total of 5,506 from holding The Ensign Group or generate 60.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Ensign Group vs. Option Care Health
Performance |
| Timeline |
| Ensign Group |
| Option Care Health |
Ensign and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Option Care
The main advantage of trading using opposite Ensign and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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