Correlation Between Oncology Institute and Encompass Health
Can any of the company-specific risk be diversified away by investing in both Oncology Institute and Encompass 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 Oncology Institute and Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oncology Institute and Encompass Health Corp, you can compare the effects of market volatilities on Oncology Institute and Encompass 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 Oncology Institute with a short position of Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oncology Institute and Encompass Health.
Diversification Opportunities for Oncology Institute and Encompass Health
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oncology and Encompass is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Oncology Institute and Encompass Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encompass Health Corp and Oncology Institute 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 Oncology Institute are associated (or correlated) with Encompass Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encompass Health Corp has no effect on the direction of Oncology Institute i.e., Oncology Institute and Encompass Health go up and down completely randomly.
Pair Corralation between Oncology Institute and Encompass Health
Considering the 90-day investment horizon Oncology Institute is expected to generate 6.69 times more return on investment than Encompass Health. However, Oncology Institute is 6.69 times more volatile than Encompass Health Corp. It trades about 0.64 of its potential returns per unit of risk. Encompass Health Corp is currently generating about 0.22 per unit of risk. If you would invest 30.00 in Oncology Institute on November 9, 2024 and sell it today you would earn a total of 59.00 from holding Oncology Institute or generate 196.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oncology Institute vs. Encompass Health Corp
Performance |
| Timeline |
| Oncology Institute |
| Encompass Health Corp |
Oncology Institute and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oncology Institute and Encompass Health
The main advantage of trading using opposite Oncology Institute and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oncology Institute position performs unexpectedly, Encompass 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 Encompass Health will offset losses from the drop in Encompass Health's long position.| Oncology Institute vs. Ramsay Health Care | Oncology Institute vs. Medical Facilities | Oncology Institute vs. Jack Nathan Medical | Oncology Institute vs. Fresenius SE Co |
| Encompass Health vs. Pennant Group | Encompass Health vs. The Ensign Group | Encompass Health vs. InnovAge Holding Corp | Encompass Health vs. ModivCare |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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