Correlation Between Elevance Health and Oscar Health

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

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

Diversification Opportunities for Elevance Health and Oscar Health

0.77

Correlation Coefficient

Elevance Health  Oscar Health

Poor diversification

The 3 months correlation between Elevance and Oscar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health and Oscar Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oscar Health 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 Oscar Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oscar Health has no effect on the direction of Elevance Health i.e., Elevance Health and Oscar Health go up and down completely randomly.

Pair Corralation between Elevance Health and Oscar Health

Considering the 90-day investment horizon Elevance Health is expected to generate 0.34 times more return on investment than Oscar Health. However, Elevance Health is 2.91 times less risky than Oscar Health. It trades about 0.0 of its potential returns per unit of risk. Oscar Health is currently generating about -0.02 per unit of risk. If you would invest  40,530  in Elevance Health on November 28, 2024 and sell it today you would lose (337.00) from holding Elevance Health or give up 0.83% of portfolio value over 90 days.

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

Elevance Health  vs.  Oscar Health

Elevance Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elevance Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Elevance Health is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Oscar Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oscar Health has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Elevance Health and Oscar Health

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

The idea behind Elevance Health and Oscar 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.