Correlation Between Encompass Health and PACS Group,

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

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

Diversification Opportunities for Encompass Health and PACS Group,

-0.19

Correlation Coefficient

Encompass Health  PACS Group,

Good diversification

The 3 months correlation between Encompass and PACS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Encompass Health Corp and PACS Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACS Group, and Encompass Health 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 Encompass Health Corp are associated (or correlated) with PACS Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACS Group, has no effect on the direction of Encompass Health i.e., Encompass Health and PACS Group, go up and down completely randomly.

Pair Corralation between Encompass Health and PACS Group,

Considering the 90-day investment horizon Encompass Health Corp is expected to generate 0.26 times more return on investment than PACS Group,. However, Encompass Health Corp is 3.91 times less risky than PACS Group,. It trades about 0.06 of its potential returns per unit of risk. PACS Group, is currently generating about -0.09 per unit of risk. If you would invest  8,367  in Encompass Health Corp on October 7, 2024 and sell it today you would earn a total of  751.00  from holding Encompass Health Corp or generate 8.98% return on investment over 90 days.

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

Encompass Health Corp  vs.  PACS Group,

Encompass Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encompass Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Encompass Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PACS Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACS Group, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Encompass Health and PACS Group,

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

The idea behind Encompass Health Corp and PACS 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.