Correlation Between Evolent Health and 10X Genomics

Can any of the company-specific risk be diversified away by investing in both Evolent Health and 10X Genomics 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 10X Genomics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evolent Health and 10X Genomics, you can compare the effects of market volatilities on Evolent Health and 10X Genomics 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 10X Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and 10X Genomics.

Diversification Opportunities for Evolent Health and 10X Genomics

0.69

Correlation Coefficient

Evolent Health  10X Genomics

Poor diversification

The 3 months correlation between Evolent and 10X is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and 10X Genomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 10X Genomics 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 10X Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 10X Genomics has no effect on the direction of Evolent Health i.e., Evolent Health and 10X Genomics go up and down completely randomly.

Pair Corralation between Evolent Health and 10X Genomics

Considering the 90-day investment horizon Evolent Health is expected to generate 0.82 times more return on investment than 10X Genomics. However, Evolent Health is 1.23 times less risky than 10X Genomics. It trades about -0.06 of its potential returns per unit of risk. 10X Genomics is currently generating about -0.14 per unit of risk. If you would invest  1,113  in Evolent Health on December 27, 2024 and sell it today you would lose (168.00) from holding Evolent Health or give up 15.09% 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.  10X Genomics

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

10X Genomics

Risk-Adjusted Performance

Very Weak

Over the last 90 days 10X Genomics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Evolent Health and 10X Genomics

The main advantage of trading using opposite Evolent Health and 10X Genomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolent Health position performs unexpectedly, 10X Genomics 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 10X Genomics will offset losses from the drop in 10X Genomics' long position.

The idea behind Evolent Health and 10X Genomics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.