Correlation Between Amedisys and Agilon Health

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

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

Diversification Opportunities for Amedisys and Agilon Health

0.74

Correlation Coefficient

Amedisys  Agilon Health

Poor diversification

The 3 months correlation between Amedisys and Agilon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and agilon health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on agilon health and Amedisys 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 Amedisys are associated (or correlated) with Agilon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of agilon health has no effect on the direction of Amedisys i.e., Amedisys and Agilon Health go up and down completely randomly.

Pair Corralation between Amedisys and Agilon Health

Given the investment horizon of 90 days Amedisys is expected to under-perform the Agilon Health. But the stock apears to be less risky and, when comparing its historical volatility, Amedisys is 5.63 times less risky than Agilon Health. The stock trades about -0.19 of its potential returns per unit of risk. The agilon health is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  188.00  in agilon health on September 14, 2024 and sell it today you would earn a total of  34.00  from holding agilon health or generate 18.09% return on investment over 90 days.

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

Amedisys  vs.  agilon health

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

agilon health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days agilon health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Amedisys and Agilon Health

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

The idea behind Amedisys and agilon health 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.