Correlation Between Mid Atlantic and Pennant

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

By analyzing existing cross correlation between Mid Atlantic Home Health and Pennant Group, you can compare the effects of market volatilities on Mid Atlantic and Pennant 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 Mid Atlantic with a short position of Pennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Atlantic and Pennant.

Diversification Opportunities for Mid Atlantic and Pennant

0.0

Correlation Coefficient

Mid Atlantic  Pennant

Pay attention - limited upside

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

Pair Corralation between Mid Atlantic and Pennant

If you would invest  0.01  in Mid Atlantic Home Health on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Mid Atlantic Home Health or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mid Atlantic Home Health  vs.  Pennant Group

Mid Atlantic Home

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pennant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mid Atlantic and Pennant

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

The idea behind Mid Atlantic Home Health and Pennant 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.