Correlation Between National Research and Evolent Health

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

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

Diversification Opportunities for National Research and Evolent Health

0.66

Correlation Coefficient

National Research  Evolent Health

Poor diversification

The 3 months correlation between National and Evolent is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and National Research 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 National Research Corp are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of National Research i.e., National Research and Evolent Health go up and down completely randomly.

Pair Corralation between National Research and Evolent Health

Considering the 90-day investment horizon National Research Corp is expected to under-perform the Evolent Health. But the stock apears to be less risky and, when comparing its historical volatility, National Research Corp is 1.23 times less risky than Evolent Health. The stock trades about -0.11 of its potential returns per unit of risk. The Evolent Health is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,098  in Evolent Health on December 29, 2024 and sell it today you would lose (138.00) from holding Evolent Health or give up 12.57% of portfolio value over 90 days.

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

National Research Corp  vs.  Evolent Health

National Research Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Evolent Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with National Research and Evolent Health

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

The idea behind National Research Corp and Evolent 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.