Correlation Between InnovAge Holding and Ensign

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

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

Diversification Opportunities for InnovAge Holding and Ensign

0.42

Correlation Coefficient

InnovAge Holding  Ensign

Very weak diversification

The 3 months correlation between InnovAge and Ensign is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and InnovAge Holding 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 InnovAge Holding Corp are associated (or correlated) with Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Ensign go up and down completely randomly.

Pair Corralation between InnovAge Holding and Ensign

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the Ensign. In addition to that, InnovAge Holding is 1.5 times more volatile than The Ensign Group. It trades about -0.14 of its total potential returns per unit of risk. The Ensign Group is currently generating about -0.02 per unit of volatility. If you would invest  13,272  in The Ensign Group on December 29, 2024 and sell it today you would lose (398.00) from holding The Ensign Group or give up 3.0% of portfolio value over 90 days.

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

InnovAge Holding Corp  vs.  The Ensign Group

InnovAge Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days InnovAge Holding Corp 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 basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ensign Group

Risk-Adjusted Performance

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 nearly stable basic indicators, Ensign is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with InnovAge Holding and Ensign

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

The idea behind InnovAge Holding Corp and The Ensign 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.