Correlation Between ModivCare and Agilon Health

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

By analyzing existing cross correlation between ModivCare and agilon health, you can compare the effects of market volatilities on ModivCare and Agilon 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 ModivCare with a short position of Agilon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ModivCare and Agilon Health.

Diversification Opportunities for ModivCare and Agilon Health

-0.04

Correlation Coefficient

ModivCare  Agilon Health

Good diversification

The 3 months correlation between ModivCare and Agilon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and agilon health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on agilon health and ModivCare 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 ModivCare are associated (or correlated) with Agilon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of agilon health has no effect on the direction of ModivCare i.e., ModivCare and Agilon Health go up and down completely randomly.

Pair Corralation between ModivCare and Agilon Health

Given the investment horizon of 90 days ModivCare is expected to generate 1.06 times more return on investment than Agilon Health. However, ModivCare is 1.06 times more volatile than agilon health. It trades about -0.04 of its potential returns per unit of risk. agilon health is currently generating about -0.08 per unit of risk. If you would invest  4,695  in ModivCare on October 1, 2024 and sell it today you would lose (3,560) from holding ModivCare or give up 75.83% of portfolio value over 90 days.

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

ModivCare  vs.  agilon health

ModivCare

Risk-Adjusted Performance

0 of 100

Very Weak

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

agilon health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days agilon health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with ModivCare and Agilon Health

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

The idea behind ModivCare and agilon health 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..