Correlation Between Evolent Health and Doximity

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

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

Diversification Opportunities for Evolent Health and Doximity

-0.48

Correlation Coefficient

Evolent Health  Doximity

Very good diversification

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

Pair Corralation between Evolent Health and Doximity

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Doximity. But the stock apears to be less risky and, when comparing its historical volatility, Evolent Health is 1.57 times less risky than Doximity. The stock trades about -0.04 of its potential returns per unit of risk. The Doximity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,346  in Doximity on December 29, 2024 and sell it today you would earn a total of  709.00  from holding Doximity or generate 13.26% return on investment over 90 days.

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

Evolent Health  vs.  Doximity

Evolent Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Doximity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doximity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Doximity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolent Health and Doximity

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

The idea behind Evolent Health and Doximity 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.