Correlation Between DaVita HealthCare and Agilon Health

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

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

Diversification Opportunities for DaVita HealthCare and Agilon Health

0.5

Correlation Coefficient

DaVita HealthCare  Agilon Health

Very weak diversification

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

Pair Corralation between DaVita HealthCare and Agilon Health

Considering the 90-day investment horizon DaVita HealthCare Partners is expected to under-perform the Agilon Health. But the stock apears to be less risky and, when comparing its historical volatility, DaVita HealthCare Partners is 2.45 times less risky than Agilon Health. The stock trades about -0.11 of its potential returns per unit of risk. The agilon health is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  209.00  in agilon health on November 29, 2024 and sell it today you would earn a total of  127.00  from holding agilon health or generate 60.77% return on investment over 90 days.

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

DaVita HealthCare Partners  vs.  agilon health

DaVita HealthCare

Risk-Adjusted Performance

Very Weak

Over the last 90 days DaVita HealthCare Partners 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 somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

agilon health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in agilon health are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Agilon Health disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DaVita HealthCare and Agilon Health

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

The idea behind DaVita HealthCare Partners and agilon 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.