Correlation Between Ensign and Spine Injury

Can any of the company-specific risk be diversified away by investing in both Ensign and Spine Injury 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 Spine Injury 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 Spine Injury Solutions, you can compare the effects of market volatilities on Ensign and Spine Injury 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 Spine Injury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Spine Injury.

Diversification Opportunities for Ensign and Spine Injury

-0.45

Correlation Coefficient

Ensign  Spine Injury

Very good diversification

The 3 months correlation between Ensign and Spine is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Spine Injury Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spine Injury Solutions 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 Spine Injury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spine Injury Solutions has no effect on the direction of Ensign i.e., Ensign and Spine Injury go up and down completely randomly.

Pair Corralation between Ensign and Spine Injury

Given the investment horizon of 90 days The Ensign Group is expected to under-perform the Spine Injury. In addition to that, Ensign is 1.15 times more volatile than Spine Injury Solutions. It trades about -0.44 of its total potential returns per unit of risk. Spine Injury Solutions is currently generating about -0.09 per unit of volatility. If you would invest  3,183  in Spine Injury Solutions on October 10, 2024 and sell it today you would lose (49.00) from holding Spine Injury Solutions or give up 1.54% of portfolio value over 90 days.

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

The Ensign Group  vs.  Spine Injury Solutions

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.

Spine Injury Solutions

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spine Injury Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Spine Injury is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ensign and Spine Injury

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

The idea behind The Ensign Group and Spine Injury Solutions 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..