Correlation Between InnovAge Holding and Healthcare Services

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

Diversification Opportunities for InnovAge Holding and Healthcare Services

-0.24

Correlation Coefficient

InnovAge Holding  Healthcare Services

Very good diversification

The 3 months correlation between InnovAge and Healthcare is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Healthcare Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Services 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 Healthcare Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Services has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Healthcare Services go up and down completely randomly.

Pair Corralation between InnovAge Holding and Healthcare Services

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the Healthcare Services. In addition to that, InnovAge Holding is 1.29 times more volatile than Healthcare Services Group. It trades about -0.13 of its total potential returns per unit of risk. Healthcare Services Group is currently generating about 0.11 per unit of volatility. If you would invest  1,080  in Healthcare Services Group on August 31, 2024 and sell it today you would earn a total of  154.00  from holding Healthcare Services Group or generate 14.26% return on investment over 90 days.

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

InnovAge Holding Corp  vs.  Healthcare Services Group

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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Healthcare Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Services Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Healthcare Services reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InnovAge Holding and Healthcare Services

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

The idea behind InnovAge Holding Corp and Healthcare Services Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.