Correlation Between Prestige Brand and Ensign
Can any of the company-specific risk be diversified away by investing in both Prestige Brand 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 Prestige Brand and Ensign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and The Ensign Group, you can compare the effects of market volatilities on Prestige Brand 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 Prestige Brand with a short position of Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Ensign.
Diversification Opportunities for Prestige Brand and Ensign
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prestige and Ensign is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand 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 Prestige Brand 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 Prestige Brand 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 Prestige Brand i.e., Prestige Brand and Ensign go up and down completely randomly.
Pair Corralation between Prestige Brand and Ensign
Considering the 90-day investment horizon Prestige Brand Holdings is expected to generate 0.65 times more return on investment than Ensign. However, Prestige Brand Holdings is 1.55 times less risky than Ensign. It trades about 0.51 of its potential returns per unit of risk. The Ensign Group is currently generating about -0.12 per unit of risk. If you would invest 7,405 in Prestige Brand Holdings on September 2, 2024 and sell it today you would earn a total of 1,072 from holding Prestige Brand Holdings or generate 14.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. The Ensign Group
Performance |
| Timeline |
| Prestige Brand Holdings |
| Ensign Group |
Prestige Brand and Ensign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Ensign
The main advantage of trading using opposite Prestige Brand and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand 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.| Prestige Brand vs. Crinetics Pharmaceuticals | Prestige Brand vs. Enanta Pharmaceuticals | Prestige Brand vs. Amicus Therapeutics | Prestige Brand vs. Connect Biopharma 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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