Correlation Between Concord Medical and ModivCare

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

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

Diversification Opportunities for Concord Medical and ModivCare

-0.14

Correlation Coefficient

Concord Medical  ModivCare

Good diversification

The 3 months correlation between Concord and ModivCare is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Concord Medical Services and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and Concord Medical 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 Concord Medical Services are associated (or correlated) with ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of Concord Medical i.e., Concord Medical and ModivCare go up and down completely randomly.

Pair Corralation between Concord Medical and ModivCare

Considering the 90-day investment horizon Concord Medical Services is expected to under-perform the ModivCare. But the stock apears to be less risky and, when comparing its historical volatility, Concord Medical Services is 1.52 times less risky than ModivCare. The stock trades about -0.03 of its potential returns per unit of risk. The ModivCare is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,991  in ModivCare on August 31, 2024 and sell it today you would lose (1,197) from holding ModivCare or give up 40.02% of portfolio value over 90 days.

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

Concord Medical Services  vs.  ModivCare

Concord Medical Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Medical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

ModivCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ModivCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Concord Medical and ModivCare

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

The idea behind Concord Medical Services and ModivCare 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.