Correlation Between Option Care and Ensign
Can any of the company-specific risk be diversified away by investing in both Option Care 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 Option Care and Ensign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Option Care Health and The Ensign Group, you can compare the effects of market volatilities on Option Care 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 Option Care with a short position of Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Option Care and Ensign.
Diversification Opportunities for Option Care and Ensign
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Option and Ensign is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and Option Care 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 Option Care Health 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 Option Care i.e., Option Care and Ensign go up and down completely randomly.
Pair Corralation between Option Care and Ensign
Given the investment horizon of 90 days Option Care Health is expected to generate 2.46 times more return on investment than Ensign. However, Option Care is 2.46 times more volatile than The Ensign Group. It trades about 0.01 of its potential returns per unit of risk. The Ensign Group is currently generating about -0.02 per unit of risk. If you would invest 3,237 in Option Care Health on November 2, 2024 and sell it today you would lose (97.00) from holding Option Care Health or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Option Care Health vs. The Ensign Group
Performance |
| Timeline |
| Option Care Health |
| Ensign Group |
Option Care and Ensign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Option Care and Ensign
The main advantage of trading using opposite Option Care and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care 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.| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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