Correlation Between Agilon Health and Establishment Labs

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

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

Diversification Opportunities for Agilon Health and Establishment Labs

-0.73

Correlation Coefficient

Agilon Health  Establishment Labs

Pay attention - limited upside

The 3 months correlation between Agilon and Establishment is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding agilon health and Establishment Labs Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Establishment Labs and Agilon 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 agilon health are associated (or correlated) with Establishment Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Establishment Labs has no effect on the direction of Agilon Health i.e., Agilon Health and Establishment Labs go up and down completely randomly.

Pair Corralation between Agilon Health and Establishment Labs

Considering the 90-day investment horizon agilon health is expected to under-perform the Establishment Labs. In addition to that, Agilon Health is 1.48 times more volatile than Establishment Labs Holdings. It trades about -0.15 of its total potential returns per unit of risk. Establishment Labs Holdings is currently generating about 0.2 per unit of volatility. If you would invest  2,659  in Establishment Labs Holdings on January 31, 2024 and sell it today you would earn a total of  2,241  from holding Establishment Labs Holdings or generate 84.28% return on investment over 90 days.

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

agilon health  vs.  Establishment Labs Holdings

agilon health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days agilon health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Establishment Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Establishment Labs Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Establishment Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilon Health and Establishment Labs

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

The idea behind agilon health and Establishment Labs 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.