Correlation Between Beyond Meat and Elevance Health

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

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

Diversification Opportunities for Beyond Meat and Elevance Health

-0.35

Correlation Coefficient

Beyond Meat  Elevance Health

Very good diversification

The 3 months correlation between Beyond and Elevance is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Elevance Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevance Health and Beyond Meat 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 Beyond Meat are associated (or correlated) with Elevance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevance Health has no effect on the direction of Beyond Meat i.e., Beyond Meat and Elevance Health go up and down completely randomly.

Pair Corralation between Beyond Meat and Elevance Health

Given the investment horizon of 90 days Beyond Meat is expected to generate 6.35 times more return on investment than Elevance Health. However, Beyond Meat is 6.35 times more volatile than Elevance Health. It trades about 0.03 of its potential returns per unit of risk. Elevance Health is currently generating about 0.13 per unit of risk. If you would invest  718.00  in Beyond Meat on February 19, 2024 and sell it today you would earn a total of  1.00  from holding Beyond Meat or generate 0.14% return on investment over 90 days.

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

Beyond Meat  vs.  Elevance Health

Beyond Meat

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Meat are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Beyond Meat may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Elevance Health

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elevance Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Elevance Health may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Beyond Meat and Elevance Health

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

The idea behind Beyond Meat and Elevance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.