Correlation Between Certara and Evolent Health

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

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

Diversification Opportunities for Certara and Evolent Health

0.58

Correlation Coefficient

Certara  Evolent Health

Very weak diversification

The 3 months correlation between Certara and Evolent is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Certara and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Certara 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 Certara 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 Certara i.e., Certara and Evolent Health go up and down completely randomly.

Pair Corralation between Certara and Evolent Health

Given the investment horizon of 90 days Certara is expected to generate 0.41 times more return on investment than Evolent Health. However, Certara is 2.47 times less risky than Evolent Health. It trades about -0.01 of its potential returns per unit of risk. Evolent Health is currently generating about -0.16 per unit of risk. If you would invest  1,180  in Certara on August 31, 2024 and sell it today you would lose (53.00) from holding Certara or give up 4.49% of portfolio value over 90 days.

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

Certara  vs.  Evolent Health

Certara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Certara has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Certara is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Evolent Health

Risk-Adjusted Performance

0 of 100

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 December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Certara and Evolent Health

The main advantage of trading using opposite Certara and Evolent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Certara 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 Certara 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.