Correlation Between Evolent Health and BANK HANDLOWY

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

Diversification Opportunities for Evolent Health and BANK HANDLOWY

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Evolent and BANK is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY and Evolent Health 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 Evolent Health are associated (or correlated) with BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Evolent Health i.e., Evolent Health and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Evolent Health and BANK HANDLOWY

Assuming the 90 days horizon Evolent Health is expected to under-perform the BANK HANDLOWY. In addition to that, Evolent Health is 8.3 times more volatile than BANK HANDLOWY. It trades about -0.21 of its total potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.06 per unit of volatility. If you would invest  2,110  in BANK HANDLOWY on September 12, 2024 and sell it today you would earn a total of  55.00  from holding BANK HANDLOWY or generate 2.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.46%
ValuesDaily Returns

Evolent Health  vs.  BANK HANDLOWY

 Performance 
       Timeline  
Evolent Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
BANK HANDLOWY 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BANK HANDLOWY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Evolent Health and BANK HANDLOWY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evolent Health and BANK HANDLOWY

The main advantage of trading using opposite Evolent Health and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.
The idea behind Evolent Health and BANK HANDLOWY 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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