Correlation Between COMPUGROUP MEDSPADR and Evolent Health

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

By analyzing existing cross correlation between COMPUGROUP MEDSPADR 1 and Evolent Health, you can compare the effects of market volatilities on COMPUGROUP MEDSPADR and Evolent 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 COMPUGROUP MEDSPADR with a short position of Evolent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMPUGROUP MEDSPADR and Evolent Health.

Diversification Opportunities for COMPUGROUP MEDSPADR and Evolent Health

-0.66

Correlation Coefficient

COMPUGROUP MEDSPADR  Evolent Health

Excellent diversification

The 3 months correlation between COMPUGROUP and Evolent is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding COMPUGROUP MEDSPADR 1 and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and COMPUGROUP MEDSPADR 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 COMPUGROUP MEDSPADR 1 are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of COMPUGROUP MEDSPADR i.e., COMPUGROUP MEDSPADR and Evolent Health go up and down completely randomly.

Pair Corralation between COMPUGROUP MEDSPADR and Evolent Health

Assuming the 90 days trading horizon COMPUGROUP MEDSPADR 1 is expected to generate 1.11 times more return on investment than Evolent Health. However, COMPUGROUP MEDSPADR is 1.11 times more volatile than Evolent Health. It trades about 0.14 of its potential returns per unit of risk. Evolent Health is currently generating about -0.21 per unit of risk. If you would invest  1,280  in COMPUGROUP MEDSPADR 1 on September 22, 2024 and sell it today you would earn a total of  800.00  from holding COMPUGROUP MEDSPADR 1 or generate 62.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

COMPUGROUP MEDSPADR 1  vs.  Evolent Health

COMPUGROUP MEDSPADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUGROUP MEDSPADR 1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COMPUGROUP MEDSPADR reported solid returns over the last few months and may actually be approaching a breakup point.

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent 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 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.

Pair Trading with COMPUGROUP MEDSPADR and Evolent Health

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

The idea behind COMPUGROUP MEDSPADR 1 and Evolent 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..