Correlation Between Pennant and Ramsay Health
Can any of the company-specific risk be diversified away by investing in both Pennant and Ramsay Health 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 Ramsay Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pennant Group and Ramsay Health Care, you can compare the effects of market volatilities on Pennant and Ramsay Health 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 Ramsay Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pennant and Ramsay Health.
Diversification Opportunities for Pennant and Ramsay Health
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pennant and Ramsay is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group and Ramsay Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramsay Health Care 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 Ramsay Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramsay Health Care has no effect on the direction of Pennant i.e., Pennant and Ramsay Health go up and down completely randomly.
Pair Corralation between Pennant and Ramsay Health
Given the investment horizon of 90 days Pennant Group is expected to generate 0.75 times more return on investment than Ramsay Health. However, Pennant Group is 1.33 times less risky than Ramsay Health. It trades about -0.08 of its potential returns per unit of risk. Ramsay Health Care is currently generating about -0.09 per unit of risk. If you would invest 3,340 in Pennant Group on August 29, 2024 and sell it today you would lose (169.00) from holding Pennant Group or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pennant Group vs. Ramsay Health Care
Performance |
| Timeline |
| Pennant Group |
| Ramsay Health Care |
Pennant and Ramsay Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pennant and Ramsay Health
The main advantage of trading using opposite Pennant and Ramsay Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pennant position performs unexpectedly, Ramsay Health 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 Ramsay Health will offset losses from the drop in Ramsay Health's long position.| Pennant vs. Select Medical Holdings | Pennant vs. Encompass Health Corp | Pennant vs. InnovAge Holding Corp | Pennant vs. Acadia Healthcare |
| Ramsay Health vs. Medical Facilities | Ramsay Health vs. Fresenius SE Co | Ramsay Health vs. Jack Nathan Medical | Ramsay Health vs. Nova Leap Health |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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