Correlation Between US Physicalrapy and Encompass Health
Can any of the company-specific risk be diversified away by investing in both US Physicalrapy 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 US Physicalrapy and Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Physicalrapy and Encompass Health Corp, you can compare the effects of market volatilities on US Physicalrapy 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 US Physicalrapy with a short position of Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physicalrapy and Encompass Health.
Diversification Opportunities for US Physicalrapy and Encompass Health
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USPH and Encompass is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding US Physicalrapy 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 US Physicalrapy 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 US Physicalrapy 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 US Physicalrapy i.e., US Physicalrapy and Encompass Health go up and down completely randomly.
Pair Corralation between US Physicalrapy and Encompass Health
Given the investment horizon of 90 days US Physicalrapy is expected to generate 2.15 times more return on investment than Encompass Health. However, US Physicalrapy is 2.15 times more volatile than Encompass Health Corp. It trades about 0.2 of its potential returns per unit of risk. Encompass Health Corp is currently generating about 0.1 per unit of risk. If you would invest 8,186 in US Physicalrapy on August 24, 2024 and sell it today you would earn a total of 1,508 from holding US Physicalrapy or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Physicalrapy vs. Encompass Health Corp
Performance |
| Timeline |
| US Physicalrapy |
| Encompass Health Corp |
US Physicalrapy and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Physicalrapy and Encompass Health
The main advantage of trading using opposite US Physicalrapy and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physicalrapy 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.| US Physicalrapy vs. Acadia Healthcare | US Physicalrapy vs. Tenet Healthcare | US Physicalrapy vs. HCA Holdings | US Physicalrapy vs. DaVita HealthCare Partners |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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