Correlation Between Evolent Health and STERIS Plc
Can any of the company-specific risk be diversified away by investing in both Evolent Health and STERIS Plc 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 STERIS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolent Health and STERIS plc, you can compare the effects of market volatilities on Evolent Health and STERIS Plc 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 STERIS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and STERIS Plc.
Diversification Opportunities for Evolent Health and STERIS Plc
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evolent and STERIS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and STERIS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STERIS plc 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 STERIS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STERIS plc has no effect on the direction of Evolent Health i.e., Evolent Health and STERIS Plc go up and down completely randomly.
Pair Corralation between Evolent Health and STERIS Plc
Considering the 90-day investment horizon Evolent Health is expected to under-perform the STERIS Plc. In addition to that, Evolent Health is 3.11 times more volatile than STERIS plc. It trades about -0.04 of its total potential returns per unit of risk. STERIS plc is currently generating about 0.02 per unit of volatility. If you would invest 20,279 in STERIS plc on August 31, 2024 and sell it today you would earn a total of 1,627 from holding STERIS plc or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolent Health vs. STERIS plc
Performance |
| Timeline |
| Evolent Health |
| STERIS plc |
Evolent Health and STERIS Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolent Health and STERIS Plc
The main advantage of trading using opposite Evolent Health and STERIS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health position performs unexpectedly, STERIS Plc 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 STERIS Plc will offset losses from the drop in STERIS Plc's long position.| Evolent Health vs. CareMax | Evolent Health vs. Certara | Evolent Health vs. Definitive Healthcare Corp | Evolent Health vs. National Research Corp |
| STERIS Plc vs. Abbott Laboratories | STERIS Plc vs. Medtronic PLC | STERIS Plc vs. Edwards Lifesciences Corp | STERIS Plc vs. ZimVie Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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