Correlation Between Enhabit and Lifestance Health

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

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

Diversification Opportunities for Enhabit and Lifestance Health

-0.36

Correlation Coefficient

Enhabit  Lifestance Health

Very good diversification

The 3 months correlation between Enhabit and Lifestance is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and Lifestance Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestance Health 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 Lifestance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestance Health has no effect on the direction of Enhabit i.e., Enhabit and Lifestance Health go up and down completely randomly.

Pair Corralation between Enhabit and Lifestance Health

Given the investment horizon of 90 days Enhabit is expected to generate 1.26 times more return on investment than Lifestance Health. However, Enhabit is 1.26 times more volatile than Lifestance Health Group. It trades about 0.09 of its potential returns per unit of risk. Lifestance Health Group is currently generating about -0.08 per unit of risk. If you would invest  769.00  in Enhabit on December 30, 2024 and sell it today you would earn a total of  95.00  from holding Enhabit or generate 12.35% return on investment over 90 days.

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

Enhabit  vs.  Lifestance Health Group

Enhabit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enhabit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Enhabit sustained solid returns over the last few months and may actually be approaching a breakup point.

Lifestance Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifestance Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Enhabit and Lifestance Health

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

The idea behind Enhabit and Lifestance Health Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.