Correlation Between Evolent Health and West Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Evolent Health and West Pharmaceutical 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 West Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolent Health and West Pharmaceutical Services, you can compare the effects of market volatilities on Evolent Health and West Pharmaceutical 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 West Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and West Pharmaceutical.
Diversification Opportunities for Evolent Health and West Pharmaceutical
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evolent and West is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and West Pharmaceutical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Pharmaceutical 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 West Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Pharmaceutical has no effect on the direction of Evolent Health i.e., Evolent Health and West Pharmaceutical go up and down completely randomly.
Pair Corralation between Evolent Health and West Pharmaceutical
Considering the 90-day investment horizon Evolent Health is expected to under-perform the West Pharmaceutical. In addition to that, Evolent Health is 4.48 times more volatile than West Pharmaceutical Services. It trades about -0.18 of its total potential returns per unit of risk. West Pharmaceutical Services is currently generating about 0.07 per unit of volatility. If you would invest 31,282 in West Pharmaceutical Services on August 31, 2024 and sell it today you would earn a total of 1,050 from holding West Pharmaceutical Services or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolent Health vs. West Pharmaceutical Services
Performance |
| Timeline |
| Evolent Health |
| West Pharmaceutical |
Evolent Health and West Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolent Health and West Pharmaceutical
The main advantage of trading using opposite Evolent Health and West Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health position performs unexpectedly, West Pharmaceutical 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 West Pharmaceutical will offset losses from the drop in West Pharmaceutical's long position.| Evolent Health vs. CareMax | Evolent Health vs. Certara | Evolent Health vs. Definitive Healthcare Corp | Evolent Health vs. National Research Corp |
| West Pharmaceutical vs. Teleflex Incorporated | West Pharmaceutical vs. Alcon AG | West Pharmaceutical vs. ResMed Inc | West Pharmaceutical vs. ICU Medical |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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