Correlation Between Evolent Health and Progyny

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

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

Diversification Opportunities for Evolent Health and Progyny

0.65

Correlation Coefficient

Evolent Health  Progyny

Poor diversification

The 3 months correlation between Evolent and Progyny is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Progyny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progyny 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 Progyny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progyny has no effect on the direction of Evolent Health i.e., Evolent Health and Progyny go up and down completely randomly.

Pair Corralation between Evolent Health and Progyny

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Progyny. In addition to that, Evolent Health is 1.3 times more volatile than Progyny. It trades about -0.16 of its total potential returns per unit of risk. Progyny is currently generating about -0.09 per unit of volatility. If you would invest  2,359  in Progyny on September 3, 2024 and sell it today you would lose (802.00) from holding Progyny or give up 34.0% of portfolio value over 90 days.

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

Evolent Health  vs.  Progyny

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Progyny

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progyny has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Evolent Health and Progyny

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

The idea behind Evolent Health and Progyny 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.