Correlation Between Evolent Health and Signify Health

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

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

Diversification Opportunities for Evolent Health and Signify Health

0.0

Correlation Coefficient

Evolent Health  Signify Health

Pay attention - limited upside

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

Pair Corralation between Evolent Health and Signify Health

If you would invest  3,049  in Signify Health on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Signify Health or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

Evolent Health  vs.  Signify Health

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 inconsistent 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.

Signify Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Evolent Health and Signify Health

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

The idea behind Evolent Health and Signify 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.