Correlation Between Enhabit and Joint Corp

Can any of the company-specific risk be diversified away by investing in both Enhabit and Joint Corp 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 Enhabit and Joint Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enhabit and The Joint Corp, you can compare the effects of market volatilities on Enhabit and Joint Corp 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 Enhabit with a short position of Joint Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhabit and Joint Corp.

Diversification Opportunities for Enhabit and Joint Corp

0.42

Correlation Coefficient

Enhabit  Joint Corp

Very weak diversification

The 3 months correlation between Enhabit and Joint is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Corp and Enhabit 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 Enhabit are associated (or correlated) with Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of Enhabit i.e., Enhabit and Joint Corp go up and down completely randomly.

Pair Corralation between Enhabit and Joint Corp

Given the investment horizon of 90 days Enhabit is expected to under-perform the Joint Corp. But the stock apears to be less risky and, when comparing its historical volatility, Enhabit is 1.13 times less risky than Joint Corp. The stock trades about -0.01 of its potential returns per unit of risk. The The Joint Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,110  in The Joint Corp on September 3, 2024 and sell it today you would earn a total of  62.00  from holding The Joint Corp or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Enhabit  vs.  The Joint Corp

Enhabit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enhabit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enhabit is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Joint Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Joint Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Joint Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Enhabit and Joint Corp

The main advantage of trading using opposite Enhabit and Joint Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit position performs unexpectedly, Joint Corp 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 Joint Corp will offset losses from the drop in Joint Corp's long position.

The idea behind Enhabit and The Joint Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.