Correlation Between ModivCare and Embecta Corp

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

By analyzing existing cross correlation between ModivCare and Embecta Corp, you can compare the effects of market volatilities on ModivCare and Embecta Corp 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 Embecta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ModivCare and Embecta Corp.

Diversification Opportunities for ModivCare and Embecta Corp

-0.42

Correlation Coefficient

ModivCare  Embecta Corp

Very good diversification

The 3 months correlation between ModivCare and Embecta is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp 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 Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of ModivCare i.e., ModivCare and Embecta Corp go up and down completely randomly.

Pair Corralation between ModivCare and Embecta Corp

Given the investment horizon of 90 days ModivCare is expected to generate 4.14 times more return on investment than Embecta Corp. However, ModivCare is 4.14 times more volatile than Embecta Corp. It trades about 0.15 of its potential returns per unit of risk. Embecta Corp is currently generating about 0.06 per unit of risk. If you would invest  89.00  in ModivCare on May 21, 2025 and sell it today you would earn a total of  154.00  from holding ModivCare or generate 173.03% return on investment over 90 days.

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

ModivCare  vs.  Embecta Corp

ModivCare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ModivCare are ranked lower than 12 (%) 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.

Embecta Corp

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Embecta Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Embecta Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ModivCare and Embecta Corp

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

The idea behind ModivCare and Embecta Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.