Correlation Between Evolent Health and Phreesia

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

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

Diversification Opportunities for Evolent Health and Phreesia

0.36

Correlation Coefficient

Evolent Health  Phreesia

Weak diversification

The 3 months correlation between Evolent and Phreesia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Phreesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phreesia 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 Phreesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phreesia has no effect on the direction of Evolent Health i.e., Evolent Health and Phreesia go up and down completely randomly.

Pair Corralation between Evolent Health and Phreesia

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Phreesia. In addition to that, Evolent Health is 1.93 times more volatile than Phreesia. It trades about -0.18 of its total potential returns per unit of risk. Phreesia is currently generating about 0.01 per unit of volatility. If you would invest  2,469  in Phreesia on September 13, 2024 and sell it today you would lose (14.00) from holding Phreesia or give up 0.57% of portfolio value over 90 days.

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

Evolent Health  vs.  Phreesia

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Phreesia

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phreesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Phreesia is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Evolent Health and Phreesia

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

The idea behind Evolent Health and Phreesia 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.