Correlation Between Evolent Health and Talkspace

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

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

Diversification Opportunities for Evolent Health and Talkspace

0.13

Correlation Coefficient

Evolent Health  Talkspace

Average diversification

The 3 months correlation between Evolent and Talkspace is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Talkspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talkspace 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 Talkspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talkspace has no effect on the direction of Evolent Health i.e., Evolent Health and Talkspace go up and down completely randomly.

Pair Corralation between Evolent Health and Talkspace

Considering the 90-day investment horizon Evolent Health is expected to generate 0.91 times more return on investment than Talkspace. However, Evolent Health is 1.1 times less risky than Talkspace. It trades about -0.04 of its potential returns per unit of risk. Talkspace is currently generating about -0.06 per unit of risk. If you would invest  1,098  in Evolent Health on December 29, 2024 and sell it today you would lose (138.00) from holding Evolent Health or give up 12.57% of portfolio value over 90 days.

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

Evolent Health  vs.  Talkspace

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.

Talkspace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Talkspace 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 essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Evolent Health and Talkspace

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

The idea behind Evolent Health and Talkspace 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.