Correlation Between InnovAge Holding and Encompass Health
Can any of the company-specific risk be diversified away by investing in both InnovAge Holding and Encompass Health 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 InnovAge Holding and Encompass Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InnovAge Holding Corp and Encompass Health Corp, you can compare the effects of market volatilities on InnovAge Holding and Encompass Health 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 InnovAge Holding with a short position of Encompass Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and Encompass Health.
Diversification Opportunities for InnovAge Holding and Encompass Health
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InnovAge and Encompass is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Encompass Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encompass Health Corp and InnovAge Holding 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 InnovAge Holding Corp are associated (or correlated) with Encompass Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encompass Health Corp has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Encompass Health go up and down completely randomly.
Pair Corralation between InnovAge Holding and Encompass Health
Given the investment horizon of 90 days InnovAge Holding Corp is expected to generate 1.87 times more return on investment than Encompass Health. However, InnovAge Holding is 1.87 times more volatile than Encompass Health Corp. It trades about 0.11 of its potential returns per unit of risk. Encompass Health Corp is currently generating about 0.06 per unit of risk. If you would invest 313.00 in InnovAge Holding Corp on April 24, 2025 and sell it today you would earn a total of 75.00 from holding InnovAge Holding Corp or generate 23.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InnovAge Holding Corp vs. Encompass Health Corp
Performance |
| Timeline |
| InnovAge Holding Corp |
| Encompass Health Corp |
InnovAge Holding and Encompass Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InnovAge Holding and Encompass Health
The main advantage of trading using opposite InnovAge Holding and Encompass Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnovAge Holding position performs unexpectedly, Encompass Health 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 Encompass Health will offset losses from the drop in Encompass Health's long position.| InnovAge Holding vs. The Ensign Group | InnovAge Holding vs. Select Medical Holdings | InnovAge Holding vs. Encompass Health Corp | InnovAge Holding vs. Enhabit |
| Encompass Health vs. Pennant Group | Encompass Health vs. The Ensign Group | Encompass Health vs. InnovAge Holding Corp | Encompass Health vs. ModivCare |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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