Correlation Between Ethema Health and Genesis Healthcare
Can any of the company-specific risk be diversified away by investing in both Ethema Health and Genesis 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 Ethema Health and Genesis Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethema Health Corp and Genesis Healthcare, you can compare the effects of market volatilities on Ethema Health and Genesis 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 Ethema Health with a short position of Genesis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethema Health and Genesis Healthcare.
Diversification Opportunities for Ethema Health and Genesis Healthcare
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ethema and Genesis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ethema Health Corp and Genesis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Healthcare and Ethema Health 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 Ethema Health Corp are associated (or correlated) with Genesis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Healthcare has no effect on the direction of Ethema Health i.e., Ethema Health and Genesis Healthcare go up and down completely randomly.
Pair Corralation between Ethema Health and Genesis Healthcare
Given the investment horizon of 90 days Ethema Health Corp is expected to generate 35.39 times more return on investment than Genesis Healthcare. However, Ethema Health is 35.39 times more volatile than Genesis Healthcare. It trades about 0.07 of its potential returns per unit of risk. Genesis Healthcare is currently generating about 0.43 per unit of risk. If you would invest 0.05 in Ethema Health Corp on August 26, 2024 and sell it today you would lose (0.01) from holding Ethema Health Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 9.05% |
| Values | Daily Returns |
Ethema Health Corp vs. Genesis Healthcare
Performance |
| Timeline |
| Ethema Health Corp |
| Genesis Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ethema Health and Genesis Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethema Health and Genesis Healthcare
The main advantage of trading using opposite Ethema Health and Genesis Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethema Health position performs unexpectedly, Genesis 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 Genesis Healthcare will offset losses from the drop in Genesis Healthcare's long position.| Ethema Health vs. Rezolute | Ethema Health vs. Tempest Therapeutics | Ethema Health vs. Forte Biosciences | Ethema Health vs. Dyadic International |
| Genesis Healthcare vs. Univec Inc | Genesis Healthcare vs. Ethema Health Corp | Genesis Healthcare vs. IMAC Holdings | Genesis Healthcare 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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