Correlation Between Pennant and Ensign
Can any of the company-specific risk be diversified away by investing in both Pennant 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 Pennant and Ensign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pennant Group and The Ensign Group, you can compare the effects of market volatilities on Pennant 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 Pennant with a short position of Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pennant and Ensign.
Diversification Opportunities for Pennant and Ensign
Almost no diversification
The 3 months correlation between Pennant and Ensign is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and Pennant 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 Pennant Group 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 Pennant i.e., Pennant and Ensign go up and down completely randomly.
Pair Corralation between Pennant and Ensign
Given the investment horizon of 90 days Pennant Group is expected to generate 1.97 times more return on investment than Ensign. However, Pennant is 1.97 times more volatile than The Ensign Group. It trades about 0.08 of its potential returns per unit of risk. The Ensign Group is currently generating about 0.07 per unit of risk. If you would invest 1,216 in Pennant Group on October 20, 2024 and sell it today you would earn a total of 1,530 from holding Pennant Group or generate 125.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pennant Group vs. The Ensign Group
Performance |
| Timeline |
| Pennant Group |
| Ensign Group |
Pennant and Ensign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pennant and Ensign
The main advantage of trading using opposite Pennant and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pennant 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.| Pennant vs. Encompass Health Corp | Pennant vs. Acadia Healthcare | Pennant vs. Select Medical Holdings | Pennant vs. Addus HomeCare |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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