Correlation Between CareMax and Privia Health

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

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

Diversification Opportunities for CareMax and Privia Health

0.47

Correlation Coefficient

CareMax  Privia Health

Very weak diversification

The 3 months correlation between CareMax and Privia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group and CareMax 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 CareMax are associated (or correlated) with Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of CareMax i.e., CareMax and Privia Health go up and down completely randomly.

Pair Corralation between CareMax and Privia Health

Given the investment horizon of 90 days CareMax is expected to under-perform the Privia Health. In addition to that, CareMax is 3.19 times more volatile than Privia Health Group. It trades about -0.09 of its total potential returns per unit of risk. Privia Health Group is currently generating about 0.06 per unit of volatility. If you would invest  2,015  in Privia Health Group on August 17, 2024 and sell it today you would earn a total of  154.00  from holding Privia Health Group or generate 7.64% return on investment over 90 days.

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

CareMax  vs.  Privia Health Group

CareMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Privia Health Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with CareMax and Privia Health

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

The idea behind CareMax and Privia Health Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.