Correlation Between Positive Physicians and Essent

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Can any of the company-specific risk be diversified away by investing in both Positive Physicians and Essent 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 Positive Physicians and Essent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Positive Physicians Holdings and Essent Group, you can compare the effects of market volatilities on Positive Physicians and Essent 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 Positive Physicians with a short position of Essent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Positive Physicians and Essent.

Diversification Opportunities for Positive Physicians and Essent

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Positive and Essent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Positive Physicians Holdings and Essent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essent Group and Positive Physicians 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 Positive Physicians Holdings are associated (or correlated) with Essent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essent Group has no effect on the direction of Positive Physicians i.e., Positive Physicians and Essent go up and down completely randomly.

Pair Corralation between Positive Physicians and Essent

Given the investment horizon of 90 days Positive Physicians Holdings is expected to generate 4.29 times more return on investment than Essent. However, Positive Physicians is 4.29 times more volatile than Essent Group. It trades about 0.02 of its potential returns per unit of risk. Essent Group is currently generating about -0.01 per unit of risk. If you would invest  1,395  in Positive Physicians Holdings on July 5, 2022 and sell it today you would lose (755.00)  from holding Positive Physicians Holdings or give up 54.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Positive Physicians Holdings  vs.  Essent Group

 Performance (%) 
       Timeline  
Positive Physicians 
Positive Performance
0 of 100
Over the last 90 days Positive Physicians Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Positive Price Channel

Essent Group 
Essent Performance
0 of 100
Over the last 90 days Essent Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Essent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Essent Price Channel

Positive Physicians and Essent Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Positive Physicians and Essent

The main advantage of trading using opposite Positive Physicians and Essent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Positive Physicians position performs unexpectedly, Essent 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 Essent will offset losses from the drop in Essent's long position.
Positive Physicians vs. Amazon Inc
The idea behind Positive Physicians Holdings and Essent 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.
Essent vs. Amazon Inc
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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