Correlation Between Progyny and Evolent Health
Can any of the company-specific risk be diversified away by investing in both Progyny and Evolent Health 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 Progyny and Evolent Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progyny and Evolent Health, you can compare the effects of market volatilities on Progyny and Evolent Health 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 Progyny with a short position of Evolent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progyny and Evolent Health.
Diversification Opportunities for Progyny and Evolent Health
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Progyny and Evolent is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Progyny and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Progyny 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 Progyny are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of Progyny i.e., Progyny and Evolent Health go up and down completely randomly.
Pair Corralation between Progyny and Evolent Health
Given the investment horizon of 90 days Progyny is expected to under-perform the Evolent Health. But the stock apears to be less risky and, when comparing its historical volatility, Progyny is 1.25 times less risky than Evolent Health. The stock trades about -0.06 of its potential returns per unit of risk. The Evolent Health is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,111 in Evolent Health on September 2, 2024 and sell it today you would lose (1,819) from holding Evolent Health or give up 58.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Progyny vs. Evolent Health
Performance |
| Timeline |
| Progyny |
| Evolent Health |
Progyny and Evolent Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progyny and Evolent Health
The main advantage of trading using opposite Progyny and Evolent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progyny position performs unexpectedly, Evolent Health 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 Evolent Health will offset losses from the drop in Evolent Health's long position.The idea behind Progyny and Evolent Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Evolent Health vs. National Research Corp | Evolent Health vs. Simulations Plus | Evolent Health vs. Privia Health Group | Evolent Health vs. Certara |
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 CEOs Directory module to screen CEOs from public companies around the world.
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