Correlation Between Acadia Healthcare and Enhabit
Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and Enhabit 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 Acadia Healthcare and Enhabit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and Enhabit, you can compare the effects of market volatilities on Acadia Healthcare and Enhabit 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 Acadia Healthcare with a short position of Enhabit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and Enhabit.
Diversification Opportunities for Acadia Healthcare and Enhabit
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Acadia and Enhabit is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit and Acadia Healthcare 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 Acadia Healthcare are associated (or correlated) with Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and Enhabit go up and down completely randomly.
Pair Corralation between Acadia Healthcare and Enhabit
Given the investment horizon of 90 days Acadia Healthcare is expected to under-perform the Enhabit. But the stock apears to be less risky and, when comparing its historical volatility, Acadia Healthcare is 1.55 times less risky than Enhabit. The stock trades about -0.12 of its potential returns per unit of risk. The Enhabit is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 960.00 in Enhabit on March 7, 2024 and sell it today you would lose (60.00) from holding Enhabit or give up 6.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Acadia Healthcare vs. Enhabit
Performance |
Timeline |
Acadia Healthcare |
Enhabit |
Acadia Healthcare and Enhabit Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Acadia Healthcare and Enhabit
The main advantage of trading using opposite Acadia Healthcare and Enhabit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, Enhabit 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 Enhabit will offset losses from the drop in Enhabit's long position.Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
Enhabit vs. The Ensign Group | Enhabit vs. Pennant Group | Enhabit vs. InnovAge Holding Corp | Enhabit vs. National HealthCare |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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