Correlation Between Entourage Health and Now Corp

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

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

Diversification Opportunities for Entourage Health and Now Corp

0.36

Correlation Coefficient

Entourage Health  Now Corp

Weak diversification

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

Pair Corralation between Entourage Health and Now Corp

Assuming the 90 days horizon Entourage Health is expected to generate 14.87 times less return on investment than Now Corp. But when comparing it to its historical volatility, Entourage Health Corp is 9.67 times less risky than Now Corp. It trades about 0.18 of its potential returns per unit of risk. Now Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Now Corp on September 13, 2024 and sell it today you would lose (0.01) from holding Now Corp or give up 50.0% of portfolio value over 90 days.

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

Entourage Health Corp  vs.  Now Corp

Entourage Health Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entourage Health Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Entourage Health reported solid returns over the last few months and may actually be approaching a breakup point.

Now Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entourage Health and Now Corp

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

The idea behind Entourage Health Corp and Now 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.