Correlation Between Evolent Health and Tela Bio
Can any of the company-specific risk be diversified away by investing in both Evolent Health and Tela Bio 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 Tela Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolent Health and Tela Bio, you can compare the effects of market volatilities on Evolent Health and Tela Bio 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 Tela Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and Tela Bio.
Diversification Opportunities for Evolent Health and Tela Bio
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evolent and Tela is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio 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 Tela Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tela Bio has no effect on the direction of Evolent Health i.e., Evolent Health and Tela Bio go up and down completely randomly.
Pair Corralation between Evolent Health and Tela Bio
Considering the 90-day investment horizon Evolent Health is expected to generate 1.1 times more return on investment than Tela Bio. However, Evolent Health is 1.1 times more volatile than Tela Bio. It trades about -0.04 of its potential returns per unit of risk. Tela Bio is currently generating about -0.06 per unit of risk. If you would invest 3,518 in Evolent Health on August 31, 2024 and sell it today you would lose (2,225) from holding Evolent Health or give up 63.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolent Health vs. Tela Bio
Performance |
| Timeline |
| Evolent Health |
| Tela Bio |
Evolent Health and Tela Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolent Health and Tela Bio
The main advantage of trading using opposite Evolent Health and Tela Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health position performs unexpectedly, Tela Bio 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 Tela Bio will offset losses from the drop in Tela Bio's long position.| Evolent Health vs. CareMax | Evolent Health vs. Certara | Evolent Health vs. Definitive Healthcare Corp | Evolent Health vs. National Research Corp |
| Tela Bio vs. Sight Sciences | Tela Bio vs. Tactile Systems Technology | Tela Bio vs. Clearpoint Neuro | Tela Bio vs. CVRx 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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