Correlation Between Veeva Systems and Evolent Health

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

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

Diversification Opportunities for Veeva Systems and Evolent Health

-0.78

Correlation Coefficient

Veeva Systems  Evolent Health

Pay attention - limited upside

The 3 months correlation between Veeva and Evolent is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Veeva Systems and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Veeva Systems 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 Veeva Systems 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 Veeva Systems i.e., Veeva Systems and Evolent Health go up and down completely randomly.

Pair Corralation between Veeva Systems and Evolent Health

Assuming the 90 days horizon Veeva Systems is expected to under-perform the Evolent Health. But the stock apears to be less risky and, when comparing its historical volatility, Veeva Systems is 1.22 times less risky than Evolent Health. The stock trades about -0.33 of its potential returns per unit of risk. The Evolent Health is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Evolent Health on October 12, 2024 and sell it today you would earn a total of  130.00  from holding Evolent Health or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Veeva Systems  vs.  Evolent Health

Veeva Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Veeva Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Veeva Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Veeva Systems and Evolent Health

The main advantage of trading using opposite Veeva Systems and Evolent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeva Systems 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 Veeva Systems 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.