Correlation Between Elevance Health and AtriCure

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

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

Diversification Opportunities for Elevance Health and AtriCure

-0.67

Correlation Coefficient

Elevance Health  AtriCure

Excellent diversification

The 3 months correlation between Elevance and AtriCure is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health and AtriCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AtriCure and Elevance Health 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 Elevance Health are associated (or correlated) with AtriCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AtriCure has no effect on the direction of Elevance Health i.e., Elevance Health and AtriCure go up and down completely randomly.

Pair Corralation between Elevance Health and AtriCure

Considering the 90-day investment horizon Elevance Health is expected to generate 0.31 times more return on investment than AtriCure. However, Elevance Health is 3.19 times less risky than AtriCure. It trades about -0.12 of its potential returns per unit of risk. AtriCure is currently generating about -0.11 per unit of risk. If you would invest  52,484  in Elevance Health on March 2, 2024 and sell it today you would lose (1,750) from holding Elevance Health or give up 3.33% of portfolio value over 90 days.

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

Elevance Health  vs.  AtriCure

Elevance Health

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elevance Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Elevance Health is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AtriCure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AtriCure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Elevance Health and AtriCure

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

The idea behind Elevance Health and AtriCure 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.