Correlation Between Ensign and COGNYTE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both Ensign and COGNYTE SOFTWARE 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 COGNYTE SOFTWARE 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 COGNYTE SOFTWARE LTD, you can compare the effects of market volatilities on Ensign and COGNYTE SOFTWARE 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 COGNYTE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and COGNYTE SOFTWARE.
Diversification Opportunities for Ensign and COGNYTE SOFTWARE
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ensign and COGNYTE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and COGNYTE SOFTWARE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COGNYTE SOFTWARE LTD 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 COGNYTE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COGNYTE SOFTWARE LTD has no effect on the direction of Ensign i.e., Ensign and COGNYTE SOFTWARE go up and down completely randomly.
Pair Corralation between Ensign and COGNYTE SOFTWARE
Assuming the 90 days horizon The Ensign Group is expected to generate 0.43 times more return on investment than COGNYTE SOFTWARE. However, The Ensign Group is 2.34 times less risky than COGNYTE SOFTWARE. It trades about 0.05 of its potential returns per unit of risk. COGNYTE SOFTWARE LTD is currently generating about 0.02 per unit of risk. If you would invest 7,709 in The Ensign Group on January 18, 2024 and sell it today you would earn a total of 3,391 from holding The Ensign Group or generate 43.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
The Ensign Group vs. COGNYTE SOFTWARE LTD
Performance |
Timeline |
Ensign Group |
COGNYTE SOFTWARE LTD |
Ensign and COGNYTE SOFTWARE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ensign and COGNYTE SOFTWARE
The main advantage of trading using opposite Ensign and COGNYTE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, COGNYTE SOFTWARE 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 COGNYTE SOFTWARE will offset losses from the drop in COGNYTE SOFTWARE's long position.Ensign vs. Superior Plus Corp | Ensign vs. Origin Agritech | Ensign vs. Identiv | Ensign vs. INTUITIVE SURGICAL |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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