Correlation Between ModivCare and Option Care
Can any of the company-specific risk be diversified away by investing in both ModivCare and Option Care 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 ModivCare and Option Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ModivCare and Option Care Health, you can compare the effects of market volatilities on ModivCare and Option Care 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 ModivCare with a short position of Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of ModivCare and Option Care.
Diversification Opportunities for ModivCare and Option Care
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ModivCare and Option is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health and ModivCare 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 ModivCare are associated (or correlated) with Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of ModivCare i.e., ModivCare and Option Care go up and down completely randomly.
Pair Corralation between ModivCare and Option Care
Given the investment horizon of 90 days ModivCare is expected to generate 0.8 times more return on investment than Option Care. However, ModivCare is 1.25 times less risky than Option Care. It trades about 0.16 of its potential returns per unit of risk. Option Care Health is currently generating about -0.18 per unit of risk. If you would invest 1,548 in ModivCare on August 28, 2024 and sell it today you would earn a total of 228.00 from holding ModivCare or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ModivCare vs. Option Care Health
Performance |
| Timeline |
| ModivCare |
| Option Care Health |
ModivCare and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ModivCare and Option Care
The main advantage of trading using opposite ModivCare and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ModivCare position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| ModivCare vs. The Ensign Group | ModivCare vs. Select Medical Holdings | ModivCare vs. Encompass Health Corp | ModivCare vs. InnovAge Holding Corp |
| Option Care vs. Addus HomeCare | Option Care vs. Acadia Healthcare | Option Care vs. Encompass Health Corp | Option Care vs. Select Medical Holdings |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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