Correlation Between Select Medical and ASGN

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

By analyzing existing cross correlation between Select Medical Holdings and ASGN Inc, you can compare the effects of market volatilities on Select Medical and ASGN 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 Select Medical with a short position of ASGN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Medical and ASGN.

Diversification Opportunities for Select Medical and ASGN

-0.26

Correlation Coefficient

Select Medical  ASGN

Very good diversification

The 3 months correlation between Select and ASGN is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Select Medical Holdings and ASGN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASGN Inc and Select Medical 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 Select Medical Holdings are associated (or correlated) with ASGN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASGN Inc has no effect on the direction of Select Medical i.e., Select Medical and ASGN go up and down completely randomly.

Pair Corralation between Select Medical and ASGN

Considering the 90-day investment horizon Select Medical Holdings is expected to generate 1.1 times more return on investment than ASGN. However, Select Medical is 1.1 times more volatile than ASGN Inc. It trades about -0.05 of its potential returns per unit of risk. ASGN Inc is currently generating about -0.09 per unit of risk. If you would invest  2,006  in Select Medical Holdings on September 15, 2024 and sell it today you would lose (58.00) from holding Select Medical Holdings or give up 2.89% of portfolio value over 90 days.

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

Select Medical Holdings  vs.  ASGN Inc

Select Medical Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Select Medical Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Select Medical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ASGN is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Select Medical and ASGN

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

The idea behind Select Medical Holdings and ASGN Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.