Correlation Between Ensign and Best Buy
Can any of the company-specific risk be diversified away by investing in both Ensign and Best Buy 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 Best Buy 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 Best Buy Co, you can compare the effects of market volatilities on Ensign and Best Buy 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 Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Best Buy.
Diversification Opportunities for Ensign and Best Buy
Poor diversification
The 3 months correlation between Ensign and Best is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Ensign i.e., Ensign and Best Buy go up and down completely randomly.
Pair Corralation between Ensign and Best Buy
Assuming the 90 days horizon The Ensign Group is expected to generate 0.74 times more return on investment than Best Buy. However, The Ensign Group is 1.35 times less risky than Best Buy. It trades about 0.05 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.0 per unit of risk. If you would invest 7,759 in The Ensign Group on January 17, 2024 and sell it today you would earn a total of 3,341 from holding The Ensign Group or generate 43.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.02% |
| Values | Daily Returns |
The Ensign Group vs. Best Buy Co
Performance |
| Timeline |
| Ensign Group |
| Best Buy |
Ensign and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Best Buy
The main advantage of trading using opposite Ensign and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| Ensign vs. Superior Plus Corp | Ensign vs. Origin Agritech | Ensign vs. Identiv | Ensign vs. INTUITIVE SURGICAL |
Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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