Correlation Between InnovAge Holding and DaVita HealthCare

Can any of the company-specific risk be diversified away by investing in both InnovAge Holding and DaVita HealthCare 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 DaVita HealthCare 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 DaVita HealthCare Partners, you can compare the effects of market volatilities on InnovAge Holding and DaVita HealthCare 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 DaVita HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and DaVita HealthCare.

Diversification Opportunities for InnovAge Holding and DaVita HealthCare

-0.07

Correlation Coefficient

InnovAge Holding  DaVita HealthCare

Good diversification

The 3 months correlation between InnovAge and DaVita is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and DaVita HealthCare Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DaVita HealthCare 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 DaVita HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DaVita HealthCare has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and DaVita HealthCare go up and down completely randomly.

Pair Corralation between InnovAge Holding and DaVita HealthCare

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the DaVita HealthCare. In addition to that, InnovAge Holding is 1.81 times more volatile than DaVita HealthCare Partners. It trades about -0.15 of its total potential returns per unit of risk. DaVita HealthCare Partners is currently generating about -0.11 per unit of volatility. If you would invest  16,617  in DaVita HealthCare Partners on November 29, 2024 and sell it today you would lose (2,319) from holding DaVita HealthCare Partners or give up 13.96% of portfolio value over 90 days.

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

InnovAge Holding Corp  vs.  DaVita HealthCare Partners

InnovAge Holding Corp

Risk-Adjusted Performance

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 March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

DaVita HealthCare

Risk-Adjusted Performance

Very Weak

Over the last 90 days DaVita HealthCare Partners 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 somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with InnovAge Holding and DaVita HealthCare

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

The idea behind InnovAge Holding Corp and DaVita HealthCare Partners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.