Correlation Between Enhabit and Stryker

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

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

Diversification Opportunities for Enhabit and Stryker

-0.06

Correlation Coefficient

Enhabit  Stryker

Good diversification

The 3 months correlation between Enhabit and Stryker is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker and Enhabit 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 Enhabit are associated (or correlated) with Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Enhabit i.e., Enhabit and Stryker go up and down completely randomly.

Pair Corralation between Enhabit and Stryker

Given the investment horizon of 90 days Enhabit is expected to generate 4.64 times more return on investment than Stryker. However, Enhabit is 4.64 times more volatile than Stryker. It trades about 0.08 of its potential returns per unit of risk. Stryker is currently generating about -0.09 per unit of risk. If you would invest  900.00  in Enhabit on January 30, 2024 and sell it today you would earn a total of  103.00  from holding Enhabit or generate 11.44% return on investment over 90 days.

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

Enhabit  vs.  Stryker

Enhabit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enhabit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Enhabit is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Stryker

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stryker are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Stryker may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Enhabit and Stryker

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

The idea behind Enhabit and Stryker 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.