Correlation Between AMN Healthcare and ModivCare

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

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

Diversification Opportunities for AMN Healthcare and ModivCare

-0.46

Correlation Coefficient

AMN Healthcare  ModivCare

Very good diversification

The 3 months correlation between AMN and ModivCare is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and AMN Healthcare 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 AMN Healthcare Services 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 AMN Healthcare i.e., AMN Healthcare and ModivCare go up and down completely randomly.

Pair Corralation between AMN Healthcare and ModivCare

Considering the 90-day investment horizon AMN Healthcare Services is expected to generate 0.58 times more return on investment than ModivCare. However, AMN Healthcare Services is 1.72 times less risky than ModivCare. It trades about -0.09 of its potential returns per unit of risk. ModivCare is currently generating about -0.23 per unit of risk. If you would invest  2,480  in AMN Healthcare Services on September 21, 2024 and sell it today you would lose (186.00) from holding AMN Healthcare Services or give up 7.5% of portfolio value over 90 days.

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

AMN Healthcare Services  vs.  ModivCare

AMN Healthcare Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 fairly stable fundamental indicators, ModivCare is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AMN Healthcare and ModivCare

The main advantage of trading using opposite AMN Healthcare and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare 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 AMN Healthcare Services 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.