Correlation Between Accolade and Evolent Health

Can any of the company-specific risk be diversified away by investing in both Accolade 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 Accolade and Evolent Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accolade and Evolent Health, you can compare the effects of market volatilities on Accolade 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 Accolade with a short position of Evolent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accolade and Evolent Health.

Diversification Opportunities for Accolade and Evolent Health

-0.61

Correlation Coefficient

Accolade  Evolent Health

Excellent diversification

The 3 months correlation between Accolade and Evolent is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Accolade and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Accolade 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 Accolade 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 Accolade i.e., Accolade and Evolent Health go up and down completely randomly.

Pair Corralation between Accolade and Evolent Health

Given the investment horizon of 90 days Accolade is expected to generate 3.81 times more return on investment than Evolent Health. However, Accolade is 3.81 times more volatile than Evolent Health. It trades about 0.13 of its potential returns per unit of risk. Evolent Health is currently generating about -0.04 per unit of risk. If you would invest  344.00  in Accolade on December 29, 2024 and sell it today you would earn a total of  355.00  from holding Accolade or generate 103.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Accolade  vs.  Evolent Health

Accolade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accolade are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Accolade exhibited solid returns over the last few months and may actually be approaching a breakup point.

Evolent Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Accolade and Evolent Health

The main advantage of trading using opposite Accolade and Evolent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accolade 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 Accolade 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.