Correlation Between Healthcare Solutions and Pennant
Can any of the company-specific risk be diversified away by investing in both Healthcare Solutions and Pennant 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 Healthcare Solutions and Pennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Healthcare Solutions Management and Pennant Group, you can compare the effects of market volatilities on Healthcare Solutions and Pennant 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 Healthcare Solutions with a short position of Pennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare Solutions and Pennant.
Diversification Opportunities for Healthcare Solutions and Pennant
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Healthcare and Pennant is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Solutions Managemen and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group and Healthcare Solutions 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 Healthcare Solutions Management are associated (or correlated) with Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Healthcare Solutions i.e., Healthcare Solutions and Pennant go up and down completely randomly.
Pair Corralation between Healthcare Solutions and Pennant
Given the investment horizon of 90 days Healthcare Solutions Management is expected to generate 3.43 times more return on investment than Pennant. However, Healthcare Solutions is 3.43 times more volatile than Pennant Group. It trades about 0.06 of its potential returns per unit of risk. Pennant Group is currently generating about 0.12 per unit of risk. If you would invest 0.06 in Healthcare Solutions Management on September 12, 2024 and sell it today you would earn a total of 0.09 from holding Healthcare Solutions Management or generate 150.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Healthcare Solutions Managemen vs. Pennant Group
Performance |
| Timeline |
| Healthcare Solutions |
| Pennant Group |
Healthcare Solutions and Pennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare Solutions and Pennant
The main advantage of trading using opposite Healthcare Solutions and Pennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Solutions position performs unexpectedly, Pennant 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 Pennant will offset losses from the drop in Pennant's long position.| Healthcare Solutions vs. Pennant Group | Healthcare Solutions vs. Encompass Health Corp | Healthcare Solutions vs. Enhabit | Healthcare Solutions vs. Concord Medical Services |
| Pennant vs. Encompass Health Corp | Pennant vs. Acadia Healthcare | Pennant vs. Select Medical Holdings | Pennant vs. Addus HomeCare |
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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