Correlation Between ModivCare and Amedisys

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

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

Diversification Opportunities for ModivCare and Amedisys

-0.4

Correlation Coefficient

ModivCare  Amedisys

Very good diversification

The 3 months correlation between ModivCare and Amedisys is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Amedisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedisys and ModivCare 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 ModivCare are associated (or correlated) with Amedisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedisys has no effect on the direction of ModivCare i.e., ModivCare and Amedisys go up and down completely randomly.

Pair Corralation between ModivCare and Amedisys

Given the investment horizon of 90 days ModivCare is expected to generate 2.58 times more return on investment than Amedisys. However, ModivCare is 2.58 times more volatile than Amedisys. It trades about 0.05 of its potential returns per unit of risk. Amedisys is currently generating about -0.19 per unit of risk. If you would invest  1,684  in ModivCare on September 14, 2024 and sell it today you would earn a total of  42.00  from holding ModivCare or generate 2.49% return on investment over 90 days.

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

ModivCare  vs.  Amedisys

ModivCare

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ModivCare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, ModivCare showed solid returns over the last few months and may actually be approaching a breakup point.

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ModivCare and Amedisys

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

The idea behind ModivCare and Amedisys 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.