Correlation Between Ensign and P3 Health

Can any of the company-specific risk be diversified away by investing in both Ensign and P3 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 Ensign and P3 Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Ensign Group and P3 Health Partners, you can compare the effects of market volatilities on Ensign and P3 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 Ensign with a short position of P3 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and P3 Health.

Diversification Opportunities for Ensign and P3 Health

0.69

Correlation Coefficient

Ensign  P3 Health

Poor diversification

The 3 months correlation between Ensign and PIII is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and P3 Health Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P3 Health Partners and Ensign 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 The Ensign Group are associated (or correlated) with P3 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P3 Health Partners has no effect on the direction of Ensign i.e., Ensign and P3 Health go up and down completely randomly.

Pair Corralation between Ensign and P3 Health

Given the investment horizon of 90 days The Ensign Group is expected to generate 0.21 times more return on investment than P3 Health. However, The Ensign Group is 4.88 times less risky than P3 Health. It trades about 0.01 of its potential returns per unit of risk. P3 Health Partners is currently generating about -0.08 per unit of risk. If you would invest  13,648  in The Ensign Group on October 22, 2024 and sell it today you would earn a total of  31.00  from holding The Ensign Group or generate 0.23% return on investment over 90 days.

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

The Ensign Group  vs.  P3 Health Partners

Ensign Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Ensign Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

P3 Health Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days P3 Health Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ensign and P3 Health

The main advantage of trading using opposite Ensign and P3 Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, P3 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 P3 Health will offset losses from the drop in P3 Health's long position.

The idea behind The Ensign Group and P3 Health Partners 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.