Correlation Between Aveanna Healthcare and Nova Leap

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

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

Diversification Opportunities for Aveanna Healthcare and Nova Leap

-0.1

Correlation Coefficient

Aveanna Healthcare  Nova Leap

Good diversification

The 3 months correlation between Aveanna and Nova is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aveanna Healthcare Holdings and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health and Aveanna 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 Aveanna Healthcare Holdings are associated (or correlated) with Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of Aveanna Healthcare i.e., Aveanna Healthcare and Nova Leap go up and down completely randomly.

Pair Corralation between Aveanna Healthcare and Nova Leap

Given the investment horizon of 90 days Aveanna Healthcare Holdings is expected to generate 1.66 times more return on investment than Nova Leap. However, Aveanna Healthcare is 1.66 times more volatile than Nova Leap Health. It trades about 0.07 of its potential returns per unit of risk. Nova Leap Health is currently generating about -0.06 per unit of risk. If you would invest  457.00  in Aveanna Healthcare Holdings on December 28, 2024 and sell it today you would earn a total of  80.00  from holding Aveanna Healthcare Holdings or generate 17.51% return on investment over 90 days.

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

Aveanna Healthcare Holdings  vs.  Nova Leap Health

Aveanna Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aveanna Healthcare Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Aveanna Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Nova Leap Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nova Leap Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aveanna Healthcare and Nova Leap

The main advantage of trading using opposite Aveanna Healthcare and Nova Leap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aveanna Healthcare position performs unexpectedly, Nova Leap 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 Nova Leap will offset losses from the drop in Nova Leap's long position.

The idea behind Aveanna Healthcare Holdings and Nova Leap 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.