Correlation Between InnovAge Holding and ModivCare
Can any of the company-specific risk be diversified away by investing in both InnovAge Holding 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 InnovAge Holding and ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InnovAge Holding Corp and ModivCare, you can compare the effects of market volatilities on InnovAge Holding 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 InnovAge Holding with a short position of ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and ModivCare.
Diversification Opportunities for InnovAge Holding and ModivCare
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InnovAge and ModivCare is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and InnovAge Holding 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 InnovAge Holding Corp 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 InnovAge Holding i.e., InnovAge Holding and ModivCare go up and down completely randomly.
Pair Corralation between InnovAge Holding and ModivCare
Given the investment horizon of 90 days InnovAge Holding Corp is expected to generate 0.55 times more return on investment than ModivCare. However, InnovAge Holding Corp is 1.81 times less risky than ModivCare. It trades about -0.03 of its potential returns per unit of risk. ModivCare is currently generating about -0.06 per unit of risk. If you would invest 585.00 in InnovAge Holding Corp on November 9, 2024 and sell it today you would lose (263.00) from holding InnovAge Holding Corp or give up 44.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InnovAge Holding Corp vs. ModivCare
Performance |
| Timeline |
| InnovAge Holding Corp |
| ModivCare |
InnovAge Holding and ModivCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InnovAge Holding and ModivCare
The main advantage of trading using opposite InnovAge Holding and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnovAge Holding 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.| InnovAge Holding vs. The Ensign Group | InnovAge Holding vs. Select Medical Holdings | InnovAge Holding vs. Encompass Health Corp | InnovAge Holding vs. Enhabit |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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