Correlation Between Tabula Rasa and Inovalon Holdings

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

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

Diversification Opportunities for Tabula Rasa and Inovalon Holdings

0.62

Correlation Coefficient

Tabula Rasa  Inovalon Holdings

Poor diversification

The 3 months correlation between Tabula and Inovalon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tabula Rasa HealthCare and Inovalon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovalon Holdings and Tabula Rasa 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 Tabula Rasa HealthCare are associated (or correlated) with Inovalon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovalon Holdings has no effect on the direction of Tabula Rasa i.e., Tabula Rasa and Inovalon Holdings go up and down completely randomly.

Pair Corralation between Tabula Rasa and Inovalon Holdings

If you would invest  1,050  in Tabula Rasa HealthCare on January 31, 2024 and sell it today you would earn a total of  0.00  from holding Tabula Rasa HealthCare or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Tabula Rasa HealthCare  vs.  Inovalon Holdings

Tabula Rasa HealthCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tabula Rasa HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Tabula Rasa is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Inovalon Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inovalon Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Inovalon Holdings is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tabula Rasa and Inovalon Holdings

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

The idea behind Tabula Rasa HealthCare and Inovalon Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.