Correlation Between Evolent Health and HMS Holdings

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

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

Diversification Opportunities for Evolent Health and HMS Holdings

0.0

Correlation Coefficient

Evolent Health  HMS Holdings

Pay attention - limited upside

The 3 months correlation between Evolent and HMS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and HMS Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMS Holdings Corp and Evolent 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 Evolent Health are associated (or correlated) with HMS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMS Holdings Corp has no effect on the direction of Evolent Health i.e., Evolent Health and HMS Holdings go up and down completely randomly.

Pair Corralation between Evolent Health and HMS Holdings

If you would invest (100.00) in HMS Holdings Corp on January 24, 2024 and sell it today you would earn a total of  100.00  from holding HMS Holdings Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Evolent Health  vs.  HMS Holdings Corp

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 fairly strong basic indicators, Evolent Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

HMS Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMS Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, HMS Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolent Health and HMS Holdings

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

The idea behind Evolent Health and HMS Holdings Corp 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.