Correlation Between Ensign and ATRION

Can any of the company-specific risk be diversified away by investing in both Ensign and ATRION 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 ATRION 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 ATRION, you can compare the effects of market volatilities on Ensign and ATRION 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 ATRION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and ATRION.

Diversification Opportunities for Ensign and ATRION

0.0

Correlation Coefficient

Ensign  ATRION

Pay attention - limited upside

The 3 months correlation between Ensign and ATRION is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and ATRION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRION 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 ATRION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRION has no effect on the direction of Ensign i.e., Ensign and ATRION go up and down completely randomly.

Pair Corralation between Ensign and ATRION

Given the investment horizon of 90 days The Ensign Group is expected to generate 0.24 times more return on investment than ATRION. However, The Ensign Group is 4.22 times less risky than ATRION. It trades about 0.07 of its potential returns per unit of risk. ATRION is currently generating about -0.04 per unit of risk. If you would invest  9,428  in The Ensign Group on August 31, 2024 and sell it today you would earn a total of  5,193  from holding The Ensign Group or generate 55.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.15%
Values	Daily Returns

The Ensign Group  vs.  ATRION

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ATRION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATRION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ATRION is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ensign and ATRION

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

The idea behind The Ensign Group and ATRION 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.