Correlation Between Evolent Health and Cooper Companies

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

By analyzing existing cross correlation between Evolent Health and The Cooper Companies, you can compare the effects of market volatilities on Evolent Health and Cooper Companies 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 Cooper Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolent Health and Cooper Companies.

Diversification Opportunities for Evolent Health and Cooper Companies

0.76

Correlation Coefficient

Evolent Health  Cooper Companies

Poor diversification

The 3 months correlation between Evolent and Cooper is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and The Cooper Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Companies 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 Cooper Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Companies has no effect on the direction of Evolent Health i.e., Evolent Health and Cooper Companies go up and down completely randomly.

Pair Corralation between Evolent Health and Cooper Companies

Considering the 90-day investment horizon Evolent Health is expected to under-perform the Cooper Companies. In addition to that, Evolent Health is 1.23 times more volatile than The Cooper Companies. It trades about -0.38 of its total potential returns per unit of risk. The Cooper Companies is currently generating about -0.34 per unit of volatility. If you would invest  9,863  in The Cooper Companies on February 6, 2024 and sell it today you would lose (799.00) from holding The Cooper Companies or give up 8.1% of portfolio value over 90 days.

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

Evolent Health  vs.  The Cooper Companies

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 latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Cooper Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Cooper Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cooper Companies is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Evolent Health and Cooper Companies

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

The idea behind Evolent Health and The Cooper Companies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .