Correlation Between ModivCare and Regional Health

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

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

Diversification Opportunities for ModivCare and Regional Health

0.15

Correlation Coefficient

ModivCare  Regional Health

Average diversification

The 3 months correlation between ModivCare and Regional is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop 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 Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of ModivCare i.e., ModivCare and Regional Health go up and down completely randomly.

Pair Corralation between ModivCare and Regional Health

Given the investment horizon of 90 days ModivCare is expected to under-perform the Regional Health. In addition to that, ModivCare is 1.32 times more volatile than Regional Health Properties. It trades about -0.04 of its total potential returns per unit of risk. Regional Health Properties is currently generating about 0.01 per unit of volatility. If you would invest  190.00  in Regional Health Properties on October 1, 2024 and sell it today you would lose (35.00) from holding Regional Health Properties or give up 18.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.65%
Values	Daily Returns

ModivCare  vs.  Regional Health Properties

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.

Regional Health Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Regional Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ModivCare and Regional Health

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

The idea behind ModivCare and Regional Health Properties 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 Transaction History module to view history of all your transactions and understand their impact on performance.