Correlation Between Evolent Health and Sharecare

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

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

Diversification Opportunities for Evolent Health and Sharecare

-0.91

Correlation Coefficient

Evolent Health  Sharecare

Pay attention - limited upside

The 3 months correlation between Evolent and Sharecare is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Sharecare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharecare 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 Sharecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharecare has no effect on the direction of Evolent Health i.e., Evolent Health and Sharecare go up and down completely randomly.

Pair Corralation between Evolent Health and Sharecare

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Sharecare. In addition to that, Evolent Health is 12.76 times more volatile than Sharecare. It trades about -0.16 of its total potential returns per unit of risk. Sharecare is currently generating about 0.15 per unit of volatility. If you would invest  139.00  in Sharecare on September 2, 2024 and sell it today you would earn a total of  4.00  from holding Sharecare or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	56.25%
Values	Daily Returns

Evolent Health  vs.  Sharecare

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 unsteady 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.

Sharecare

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Sharecare has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Sharecare is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Evolent Health and Sharecare

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

The idea behind Evolent Health and Sharecare 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.