Correlation Between CorVel Corp and EHealth

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

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

Diversification Opportunities for CorVel Corp and EHealth

0.5

Correlation Coefficient

CorVel Corp  EHealth

Very weak diversification

The 3 months correlation between CorVel and EHealth is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CorVel Corp and eHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eHealth and CorVel Corp 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 CorVel Corp are associated (or correlated) with EHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eHealth has no effect on the direction of CorVel Corp i.e., CorVel Corp and EHealth go up and down completely randomly.

Pair Corralation between CorVel Corp and EHealth

Given the investment horizon of 90 days CorVel Corp is expected to generate 0.57 times more return on investment than EHealth. However, CorVel Corp is 1.75 times less risky than EHealth. It trades about 0.01 of its potential returns per unit of risk. eHealth is currently generating about -0.09 per unit of risk. If you would invest  11,226  in CorVel Corp on December 30, 2024 and sell it today you would lose (90.00) from holding CorVel Corp or give up 0.8% of portfolio value over 90 days.

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

CorVel Corp  vs.  eHealth

CorVel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CorVel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CorVel Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

eHealth

Risk-Adjusted Performance

Very Weak

Over the last 90 days eHealth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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 CorVel Corp and EHealth

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

The idea behind CorVel Corp and eHealth 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.