Correlation Between InnovAge Holding and Pennant

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

Diversification Opportunities for InnovAge Holding and Pennant

0.55

Correlation Coefficient

InnovAge Holding  Pennant

Very weak diversification

The 3 months correlation between InnovAge and Pennant is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding InnovAge Holding Corp and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group 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 Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of InnovAge Holding i.e., InnovAge Holding and Pennant go up and down completely randomly.

Pair Corralation between InnovAge Holding and Pennant

Given the investment horizon of 90 days InnovAge Holding Corp is expected to under-perform the Pennant. In addition to that, InnovAge Holding is 1.08 times more volatile than Pennant Group. It trades about -0.14 of its total potential returns per unit of risk. Pennant Group is currently generating about -0.02 per unit of volatility. If you would invest  2,622  in Pennant Group on December 30, 2024 and sell it today you would lose (161.00) from holding Pennant Group or give up 6.14% of portfolio value over 90 days.

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

InnovAge Holding Corp  vs.  Pennant Group

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.

Pennant Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pennant is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with InnovAge Holding and Pennant

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

The idea behind InnovAge Holding Corp and Pennant 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .