Correlation Between Heartbeam and Evolent Health

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

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

Diversification Opportunities for Heartbeam and Evolent Health

0.52

Correlation Coefficient

Heartbeam  Evolent Health

Very weak diversification

The 3 months correlation between Heartbeam and Evolent is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Heartbeam and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Heartbeam 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 Heartbeam 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 Heartbeam i.e., Heartbeam and Evolent Health go up and down completely randomly.

Pair Corralation between Heartbeam and Evolent Health

Given the investment horizon of 90 days Heartbeam is expected to generate 1.55 times more return on investment than Evolent Health. However, Heartbeam is 1.55 times more volatile than Evolent Health. It trades about 0.01 of its potential returns per unit of risk. Evolent Health is currently generating about -0.04 per unit of risk. If you would invest  315.00  in Heartbeam on December 1, 2024 and sell it today you would lose (113.00) from holding Heartbeam or give up 35.87% of portfolio value over 90 days.

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

Heartbeam  vs.  Evolent Health

Heartbeam

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heartbeam has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Heartbeam and Evolent Health

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

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.