Correlation Between HCA Holdings and Ensign
Can any of the company-specific risk be diversified away by investing in both HCA Holdings and Ensign 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 HCA Holdings and Ensign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Holdings and The Ensign Group, you can compare the effects of market volatilities on HCA Holdings and Ensign 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 HCA Holdings with a short position of Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Holdings and Ensign.
Diversification Opportunities for HCA Holdings and Ensign
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between HCA and Ensign is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and HCA Holdings 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 HCA Holdings are associated (or correlated) with Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of HCA Holdings i.e., HCA Holdings and Ensign go up and down completely randomly.
Pair Corralation between HCA Holdings and Ensign
Considering the 90-day investment horizon HCA Holdings is expected to generate 2.78 times less return on investment than Ensign. In addition to that, HCA Holdings is 1.12 times more volatile than The Ensign Group. It trades about 0.03 of its total potential returns per unit of risk. The Ensign Group is currently generating about 0.09 per unit of volatility. If you would invest 11,306 in The Ensign Group on August 28, 2024 and sell it today you would earn a total of 3,214 from holding The Ensign Group or generate 28.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Holdings vs. The Ensign Group
Performance |
| Timeline |
| HCA Holdings |
| Ensign Group |
HCA Holdings and Ensign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Holdings and Ensign
The main advantage of trading using opposite HCA Holdings and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Holdings position performs unexpectedly, Ensign 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 Ensign will offset losses from the drop in Ensign's long position.| HCA Holdings vs. Elevance Health | HCA Holdings vs. Centene Corp | HCA Holdings vs. UnitedHealth Group Incorporated | HCA Holdings vs. CVS Health Corp |
| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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