Correlation Between MSP Recovery and ModivCare

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

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

Diversification Opportunities for MSP Recovery and ModivCare

-0.35

Correlation Coefficient

MSP Recovery  ModivCare

Very good diversification

The 3 months correlation between MSP and ModivCare is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare and MSP Recovery 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 MSP Recovery are associated (or correlated) with ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of MSP Recovery i.e., MSP Recovery and ModivCare go up and down completely randomly.

Pair Corralation between MSP Recovery and ModivCare

Assuming the 90 days horizon MSP Recovery is expected to under-perform the ModivCare. But the stock apears to be less risky and, when comparing its historical volatility, MSP Recovery is 1.52 times less risky than ModivCare. The stock trades about 0.0 of its potential returns per unit of risk. The ModivCare is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  141.00  in ModivCare on May 3, 2025 and sell it today you would earn a total of  129.00  from holding ModivCare or generate 91.49% return on investment over 90 days.

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

MSP Recovery  vs.  ModivCare

MSP Recovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days MSP Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MSP Recovery is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with MSP Recovery and ModivCare

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

The idea behind MSP Recovery and ModivCare 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.