Correlation Between Regis Healthcare and EP Financial

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

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

Diversification Opportunities for Regis Healthcare and EP Financial

0.63

Correlation Coefficient

Regis Healthcare  EP Financial

Poor diversification

The 3 months correlation between Regis and EP1 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Regis Healthcare and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Regis 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 Regis Healthcare are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Regis Healthcare i.e., Regis Healthcare and EP Financial go up and down completely randomly.

Pair Corralation between Regis Healthcare and EP Financial

Assuming the 90 days trading horizon Regis Healthcare is expected to generate 2.58 times less return on investment than EP Financial. But when comparing it to its historical volatility, Regis Healthcare is 1.72 times less risky than EP Financial. It trades about 0.07 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  41.00  in EP Financial Group on September 20, 2024 and sell it today you would earn a total of  8.00  from holding EP Financial Group or generate 19.51% return on investment over 90 days.

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

Regis Healthcare  vs.  EP Financial Group

Regis Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Healthcare are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Regis Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EP Financial Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EP Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regis Healthcare and EP Financial

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

The idea behind Regis Healthcare and EP Financial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.