Correlation Between Pennant and ModivCare
Can any of the company-specific risk be diversified away by investing in both Pennant and ModivCare 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 ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pennant Group and ModivCare, you can compare the effects of market volatilities on Pennant and ModivCare 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 ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pennant and ModivCare.
Diversification Opportunities for Pennant and ModivCare
Very good diversification
The 3 months correlation between Pennant and ModivCare is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare 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 ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of Pennant i.e., Pennant and ModivCare go up and down completely randomly.
Pair Corralation between Pennant and ModivCare
Given the investment horizon of 90 days Pennant Group is expected to under-perform the ModivCare. But the stock apears to be less risky and, when comparing its historical volatility, Pennant Group is 1.92 times less risky than ModivCare. The stock trades about -0.16 of its potential returns per unit of risk. The ModivCare is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,548 in ModivCare on August 28, 2024 and sell it today you would earn a total of 228.00 from holding ModivCare or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pennant Group vs. ModivCare
Performance |
| Timeline |
| Pennant Group |
| ModivCare |
Pennant and ModivCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pennant and ModivCare
The main advantage of trading using opposite Pennant and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pennant position performs unexpectedly, ModivCare 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 ModivCare will offset losses from the drop in ModivCare's long position.| Pennant vs. Encompass Health Corp | Pennant vs. Acadia Healthcare | Pennant vs. Select Medical Holdings | Pennant vs. Addus HomeCare |
| ModivCare vs. The Ensign Group | ModivCare vs. Select Medical Holdings | ModivCare vs. Encompass Health Corp | ModivCare vs. InnovAge Holding Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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