Correlation Between EGF Theramed and Privia Health

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

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

Diversification Opportunities for EGF Theramed and Privia Health

-0.48

Correlation Coefficient

EGF Theramed  Privia Health

Very good diversification

The 3 months correlation between EGF and Privia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EGF Theramed Health and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group and EGF Theramed 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 EGF Theramed Health are associated (or correlated) with Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of EGF Theramed i.e., EGF Theramed and Privia Health go up and down completely randomly.

Pair Corralation between EGF Theramed and Privia Health

Assuming the 90 days horizon EGF Theramed Health is expected to generate 18.89 times more return on investment than Privia Health. However, EGF Theramed is 18.89 times more volatile than Privia Health Group. It trades about 0.09 of its potential returns per unit of risk. Privia Health Group is currently generating about 0.12 per unit of risk. If you would invest  10.00  in EGF Theramed Health on December 27, 2024 and sell it today you would lose (5.10) from holding EGF Theramed Health or give up 51.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

EGF Theramed Health  vs.  Privia Health Group

EGF Theramed Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Privia Health Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EGF Theramed and Privia Health

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

The idea behind EGF Theramed Health and Privia Health Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.