Correlation Between Ensign and Apple

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

Diversification Opportunities for Ensign and Apple

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Ensign and Apple is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Ensign i.e., Ensign and Apple go up and down completely randomly.

Pair Corralation between Ensign and Apple

Assuming the 90 days horizon The Ensign Group is expected to generate 1.17 times more return on investment than Apple. However, Ensign is 1.17 times more volatile than Apple Inc. It trades about 0.08 of its potential returns per unit of risk. Apple Inc is currently generating about -0.15 per unit of risk. If you would invest  11,300  in The Ensign Group on December 29, 2023 and sell it today you would earn a total of  300.00  from holding The Ensign Group or generate 2.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

The Ensign Group  vs.  Apple Inc

 Performance 
       Timeline  
Ensign Group 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Ensign Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ensign reported solid returns over the last few months and may actually be approaching a breakup point.
Apple Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Ensign and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ensign and Apple

The main advantage of trading using opposite Ensign and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind The Ensign Group and Apple Inc 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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