Correlation Between Agilon Health and ModivCare

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

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

Diversification Opportunities for Agilon Health and ModivCare

-0.04

Correlation Coefficient

Agilon Health  ModivCare

Good diversification

The 3 months correlation between Agilon and ModivCare is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding agilon health and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and Agilon 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 agilon health 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 Agilon Health i.e., Agilon Health and ModivCare go up and down completely randomly.

Pair Corralation between Agilon Health and ModivCare

Considering the 90-day investment horizon agilon health is expected to under-perform the ModivCare. But the stock apears to be less risky and, when comparing its historical volatility, agilon health is 1.06 times less risky than ModivCare. The stock trades about -0.08 of its potential returns per unit of risk. The ModivCare is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,695  in ModivCare on October 1, 2024 and sell it today you would lose (3,560) from holding ModivCare or give up 75.83% of portfolio value over 90 days.

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

agilon health  vs.  ModivCare

agilon health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days agilon health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ModivCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ModivCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Agilon Health and ModivCare

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

The idea behind agilon health and ModivCare 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.