Correlation Between Evolent Health and HealthEquity
Can any of the company-specific risk be diversified away by investing in both Evolent Health and HealthEquity 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 HealthEquity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolent Health and HealthEquity, you can compare the effects of market volatilities on Evolent Health and HealthEquity 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 HealthEquity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and HealthEquity.
Diversification Opportunities for Evolent Health and HealthEquity
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Evolent and HealthEquity is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity 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 HealthEquity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthEquity has no effect on the direction of Evolent Health i.e., Evolent Health and HealthEquity go up and down completely randomly.
Pair Corralation between Evolent Health and HealthEquity
Considering the 90-day investment horizon Evolent Health is expected to under-perform the HealthEquity. In addition to that, Evolent Health is 3.34 times more volatile than HealthEquity. It trades about -0.18 of its total potential returns per unit of risk. HealthEquity is currently generating about 0.24 per unit of volatility. If you would invest 7,469 in HealthEquity on September 10, 2024 and sell it today you would earn a total of 2,552 from holding HealthEquity or generate 34.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Evolent Health vs. HealthEquity
Performance |
Timeline |
Evolent Health |
HealthEquity |
Evolent Health and HealthEquity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Evolent Health and HealthEquity
The main advantage of trading using opposite Evolent Health and HealthEquity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health position performs unexpectedly, HealthEquity 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 HealthEquity will offset losses from the drop in HealthEquity's long position.Evolent Health vs. CareMax | Evolent Health vs. Certara | Evolent Health vs. Definitive Healthcare Corp | Evolent Health vs. National Research Corp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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