Correlation Between Amedisys and ModivCare
Can any of the company-specific risk be diversified away by investing in both Amedisys and ModivCare 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 Amedisys and ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedisys and ModivCare, you can compare the effects of market volatilities on Amedisys and ModivCare 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 Amedisys with a short position of ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and ModivCare.
Diversification Opportunities for Amedisys and ModivCare
Modest diversification
The 3 months correlation between Amedisys and ModivCare is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and Amedisys 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 Amedisys are associated (or correlated) with ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of Amedisys i.e., Amedisys and ModivCare go up and down completely randomly.
Pair Corralation between Amedisys and ModivCare
Given the investment horizon of 90 days Amedisys is expected to under-perform the ModivCare. But the stock apears to be less risky and, when comparing its historical volatility, Amedisys is 3.88 times less risky than ModivCare. The stock trades about -0.19 of its potential returns per unit of risk. The ModivCare is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,548 in ModivCare on August 28, 2024 and sell it today you would earn a total of 228.00 from holding ModivCare or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedisys vs. ModivCare
Performance |
| Timeline |
| Amedisys |
| ModivCare |
Amedisys and ModivCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedisys and ModivCare
The main advantage of trading using opposite Amedisys and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedisys position performs unexpectedly, ModivCare 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 ModivCare will offset losses from the drop in ModivCare's long position.| Amedisys vs. Acadia Healthcare | Amedisys vs. Addus HomeCare | Amedisys vs. Encompass Health Corp | Amedisys vs. The Ensign Group |
| ModivCare vs. The Ensign Group | ModivCare vs. Select Medical Holdings | ModivCare vs. Encompass Health Corp | ModivCare vs. InnovAge Holding Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |