Correlation Between ModivCare and American Scientf

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

By analyzing existing cross correlation between ModivCare and American Scientf, you can compare the effects of market volatilities on ModivCare and American Scientf 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 American Scientf. Check out your portfolio center. Please also check ongoing floating volatility patterns of ModivCare and American Scientf.

Diversification Opportunities for ModivCare and American Scientf

-0.84

Correlation Coefficient

ModivCare  American Scientf

Pay attention - limited upside

The 3 months correlation between ModivCare and American is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and American Scientf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Scientf 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 American Scientf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Scientf has no effect on the direction of ModivCare i.e., ModivCare and American Scientf go up and down completely randomly.

Pair Corralation between ModivCare and American Scientf

Given the investment horizon of 90 days ModivCare is expected to under-perform the American Scientf. But the stock apears to be less risky and, when comparing its historical volatility, ModivCare is 14.44 times less risky than American Scientf. The stock trades about -0.16 of its potential returns per unit of risk. The American Scientf is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in American Scientf on October 26, 2024 and sell it today you would earn a total of  0.01  from holding American Scientf or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

ModivCare  vs.  American Scientf

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 fragile performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

American Scientf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Scientf are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, American Scientf showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ModivCare and American Scientf

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

The idea behind ModivCare and American Scientf 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.