Correlation Between Evolent Health and Veradigm

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

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

Diversification Opportunities for Evolent Health and Veradigm

0.0

Correlation Coefficient

Evolent Health  Veradigm

Pay attention - limited upside

The 3 months correlation between Evolent and Veradigm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Veradigm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veradigm 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 Veradigm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veradigm has no effect on the direction of Evolent Health i.e., Evolent Health and Veradigm go up and down completely randomly.

Pair Corralation between Evolent Health and Veradigm

If you would invest (100.00) in Veradigm on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Veradigm or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Evolent Health  vs.  Veradigm

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.

Veradigm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veradigm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Veradigm is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolent Health and Veradigm

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

The idea behind Evolent Health and Veradigm 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.