Correlation Between Oncology Institute and Ensign

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

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

Diversification Opportunities for Oncology Institute and Ensign

0.32

Correlation Coefficient

Oncology Institute  Ensign

Weak diversification

The 3 months correlation between Oncology and Ensign is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Oncology Institute and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group and Oncology Institute 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 Oncology Institute 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 Oncology Institute i.e., Oncology Institute and Ensign go up and down completely randomly.

Pair Corralation between Oncology Institute and Ensign

Considering the 90-day investment horizon Oncology Institute is expected to under-perform the Ensign. In addition to that, Oncology Institute is 4.73 times more volatile than The Ensign Group. It trades about -0.09 of its total potential returns per unit of risk. The Ensign Group is currently generating about 0.09 per unit of volatility. If you would invest  10,745  in The Ensign Group on September 4, 2024 and sell it today you would earn a total of  3,770  from holding The Ensign Group or generate 35.09% return on investment over 90 days.

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

Oncology Institute  vs.  The Ensign Group

Oncology Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oncology Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 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 nearly stable basic indicators, Ensign is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oncology Institute and Ensign

The main advantage of trading using opposite Oncology Institute and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oncology Institute 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 Oncology Institute 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..