Correlation Between Elevance Health and Fulgent Genetics

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

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

Diversification Opportunities for Elevance Health and Fulgent Genetics

-0.44

Correlation Coefficient

Elevance Health  Fulgent Genetics

Very good diversification

The 3 months correlation between Elevance and Fulgent is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health and Fulgent Genetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Genetics and Elevance Health 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 Elevance Health are associated (or correlated) with Fulgent Genetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Genetics has no effect on the direction of Elevance Health i.e., Elevance Health and Fulgent Genetics go up and down completely randomly.

Pair Corralation between Elevance Health and Fulgent Genetics

Considering the 90-day investment horizon Elevance Health is expected to generate 0.6 times more return on investment than Fulgent Genetics. However, Elevance Health is 1.65 times less risky than Fulgent Genetics. It trades about 0.16 of its potential returns per unit of risk. Fulgent Genetics is currently generating about -0.05 per unit of risk. If you would invest  37,210  in Elevance Health on December 26, 2024 and sell it today you would earn a total of  5,843  from holding Elevance Health or generate 15.7% return on investment over 90 days.

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

Elevance Health  vs.  Fulgent Genetics

Elevance Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elevance Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Elevance Health showed solid returns over the last few months and may actually be approaching a breakup point.

Fulgent Genetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fulgent Genetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Elevance Health and Fulgent Genetics

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

The idea behind Elevance Health and Fulgent Genetics 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.