Correlation Between P3 Health and Ensign

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

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

Diversification Opportunities for P3 Health and Ensign

0.66

Correlation Coefficient

P3 Health  Ensign

Poor diversification

The 3 months correlation between PIII and Ensign is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding P3 Health Partners and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and P3 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 P3 Health Partners 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 P3 Health i.e., P3 Health and Ensign go up and down completely randomly.

Pair Corralation between P3 Health and Ensign

Given the investment horizon of 90 days P3 Health Partners is expected to under-perform the Ensign. In addition to that, P3 Health is 5.61 times more volatile than The Ensign Group. It trades about -0.05 of its total potential returns per unit of risk. The Ensign Group is currently generating about 0.04 per unit of volatility. If you would invest  11,949  in The Ensign Group on October 7, 2024 and sell it today you would earn a total of  1,301  from holding The Ensign Group or generate 10.89% return on investment over 90 days.

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

P3 Health Partners  vs.  The Ensign Group

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.

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.

Pair Trading with P3 Health and Ensign

The main advantage of trading using opposite P3 Health and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P3 Health 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 P3 Health Partners 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.