Correlation Between Elevance Health and ModivCare
Can any of the company-specific risk be diversified away by investing in both Elevance Health 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 Elevance Health and ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elevance Health and ModivCare, you can compare the effects of market volatilities on Elevance Health 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 Elevance Health with a short position of ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elevance Health and ModivCare.
Diversification Opportunities for Elevance Health and ModivCare
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elevance and ModivCare is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and Elevance 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 Elevance Health 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 Elevance Health i.e., Elevance Health and ModivCare go up and down completely randomly.
Pair Corralation between Elevance Health and ModivCare
Considering the 90-day investment horizon Elevance Health is expected to generate 0.27 times more return on investment than ModivCare. However, Elevance Health is 3.65 times less risky than ModivCare. It trades about -0.03 of its potential returns per unit of risk. ModivCare is currently generating about -0.03 per unit of risk. If you would invest 51,687 in Elevance Health on August 27, 2024 and sell it today you would lose (11,432) from holding Elevance Health or give up 22.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elevance Health vs. ModivCare
Performance |
| Timeline |
| Elevance Health |
| ModivCare |
Elevance Health and ModivCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elevance Health and ModivCare
The main advantage of trading using opposite Elevance Health and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health 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.| Elevance Health vs. Cigna Corp | Elevance Health vs. UnitedHealth Group Incorporated | Elevance Health vs. Centene Corp | Elevance Health vs. Molina Healthcare |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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