Correlation Between Health Catalyst and Evolent Health

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

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

Diversification Opportunities for Health Catalyst and Evolent Health

0.0

Correlation Coefficient

Health Catalyst  Evolent Health

Pay attention - limited upside

The 3 months correlation between Health and Evolent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Catalyst and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Health Catalyst 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 Health Catalyst 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 Health Catalyst i.e., Health Catalyst and Evolent Health go up and down completely randomly.

Pair Corralation between Health Catalyst and Evolent Health

Given the investment horizon of 90 days Health Catalyst is expected to generate 0.95 times more return on investment than Evolent Health. However, Health Catalyst is 1.05 times less risky than Evolent Health. It trades about 0.02 of its potential returns per unit of risk. Evolent Health is currently generating about -0.06 per unit of risk. If you would invest  860.00  in Health Catalyst on September 11, 2024 and sell it today you would lose (26.00) from holding Health Catalyst or give up 3.02% of portfolio value over 90 days.

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

Health Catalyst  vs.  Evolent Health

Health Catalyst

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Health Catalyst are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Health Catalyst may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 inconsistent 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.

Pair Trading with Health Catalyst and Evolent Health

The main advantage of trading using opposite Health Catalyst and Evolent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Catalyst 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 Health Catalyst 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.