Correlation Between InnovAge Holding and Amedisys

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

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

Diversification Opportunities for InnovAge Holding and Amedisys

0.82

Correlation Coefficient

InnovAge Holding  Amedisys

Very poor diversification

The 3 months correlation between InnovAge and Amedisys is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Amedisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedisys and InnovAge Holding 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 InnovAge Holding Corp are associated (or correlated) with Amedisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedisys has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Amedisys go up and down completely randomly.

Pair Corralation between InnovAge Holding and Amedisys

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the Amedisys. In addition to that, InnovAge Holding is 4.7 times more volatile than Amedisys. It trades about -0.16 of its total potential returns per unit of risk. Amedisys is currently generating about 0.3 per unit of volatility. If you would invest  8,558  in Amedisys on October 8, 2024 and sell it today you would earn a total of  570.00  from holding Amedisys or generate 6.66% return on investment over 90 days.

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

InnovAge Holding Corp  vs.  Amedisys

InnovAge Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InnovAge Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amedisys is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with InnovAge Holding and Amedisys

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

The idea behind InnovAge Holding Corp and Amedisys 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.