Correlation Between Ensign and Tenet Healthcare
Can any of the company-specific risk be diversified away by investing in both Ensign and Tenet Healthcare 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 Tenet Healthcare 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 Tenet Healthcare, you can compare the effects of market volatilities on Ensign and Tenet Healthcare 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 Tenet Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Tenet Healthcare.
Diversification Opportunities for Ensign and Tenet Healthcare
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ensign and Tenet is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Tenet Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenet Healthcare 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 Tenet Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenet Healthcare has no effect on the direction of Ensign i.e., Ensign and Tenet Healthcare go up and down completely randomly.
Pair Corralation between Ensign and Tenet Healthcare
Given the investment horizon of 90 days Ensign is expected to generate 2.51 times less return on investment than Tenet Healthcare. But when comparing it to its historical volatility, The Ensign Group is 1.7 times less risky than Tenet Healthcare. It trades about 0.08 of its potential returns per unit of risk. Tenet Healthcare is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,460 in Tenet Healthcare on August 24, 2024 and sell it today you would earn a total of 9,903 from holding Tenet Healthcare or generate 222.04% 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. Tenet Healthcare
Performance |
| Timeline |
| Ensign Group |
| Tenet Healthcare |
Ensign and Tenet Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Tenet Healthcare
The main advantage of trading using opposite Ensign and Tenet Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Tenet Healthcare 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 Tenet Healthcare will offset losses from the drop in Tenet Healthcare's long position.| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
| Tenet Healthcare vs. Acadia Healthcare | Tenet Healthcare vs. HCA Holdings | Tenet Healthcare vs. US Physicalrapy | Tenet Healthcare vs. DaVita HealthCare Partners |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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