Correlation Between InnovAge Holding and P3 Health

Can any of the company-specific risk be diversified away by investing in both InnovAge Holding and P3 Health 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 P3 Health 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 P3 Health Partners, you can compare the effects of market volatilities on InnovAge Holding and P3 Health 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 P3 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of InnovAge Holding and P3 Health.

Diversification Opportunities for InnovAge Holding and P3 Health

-0.24

Correlation Coefficient

InnovAge Holding  P3 Health

Very good diversification

The 3 months correlation between InnovAge and PIIIW is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and P3 Health Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P3 Health Partners 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 P3 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P3 Health Partners has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and P3 Health go up and down completely randomly.

Pair Corralation between InnovAge Holding and P3 Health

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the P3 Health. But the stock apears to be less risky and, when comparing its historical volatility, InnovAge Holding Corp is 4.41 times less risky than P3 Health. The stock trades about -0.16 of its potential returns per unit of risk. The P3 Health Partners is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.08  in P3 Health Partners on December 1, 2024 and sell it today you would earn a total of  0.48  from holding P3 Health Partners or generate 44.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.67%
Values	Daily Returns

InnovAge Holding Corp  vs.  P3 Health 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

P3 Health Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in P3 Health Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, P3 Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InnovAge Holding and P3 Health

The main advantage of trading using opposite InnovAge Holding and P3 Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InnovAge Holding position performs unexpectedly, P3 Health 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 P3 Health will offset losses from the drop in P3 Health's long position.

The idea behind InnovAge Holding Corp and P3 Health 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.