Correlation Between ModivCare and Alignment Healthcare

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

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

Diversification Opportunities for ModivCare and Alignment Healthcare

-0.64

Correlation Coefficient

ModivCare  Alignment Healthcare

Excellent diversification

The 3 months correlation between ModivCare and Alignment is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Alignment Healthcare LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignment Healthcare LLC and ModivCare 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 ModivCare are associated (or correlated) with Alignment Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignment Healthcare LLC has no effect on the direction of ModivCare i.e., ModivCare and Alignment Healthcare go up and down completely randomly.

Pair Corralation between ModivCare and Alignment Healthcare

Given the investment horizon of 90 days ModivCare is expected to generate 6.79 times more return on investment than Alignment Healthcare. However, ModivCare is 6.79 times more volatile than Alignment Healthcare LLC. It trades about 0.12 of its potential returns per unit of risk. Alignment Healthcare LLC is currently generating about -0.21 per unit of risk. If you would invest  154.00  in ModivCare on April 24, 2025 and sell it today you would earn a total of  137.00  from holding ModivCare or generate 88.96% return on investment over 90 days.

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

ModivCare  vs.  Alignment Healthcare LLC

ModivCare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ModivCare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, ModivCare showed solid returns over the last few months and may actually be approaching a breakup point.

Alignment Healthcare LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alignment Healthcare LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ModivCare and Alignment Healthcare

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

The idea behind ModivCare and Alignment Healthcare LLC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.