Correlation Between Option Care and InnovAge Holding

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

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

Diversification Opportunities for Option Care and InnovAge Holding

-0.06

Correlation Coefficient

Option Care  InnovAge Holding

Good diversification

The 3 months correlation between Option and InnovAge is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and InnovAge Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnovAge Holding Corp and Option Care 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 Option Care Health are associated (or correlated) with InnovAge Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnovAge Holding Corp has no effect on the direction of Option Care i.e., Option Care and InnovAge Holding go up and down completely randomly.

Pair Corralation between Option Care and InnovAge Holding

Given the investment horizon of 90 days Option Care Health is expected to generate 0.37 times more return on investment than InnovAge Holding. However, Option Care Health is 2.73 times less risky than InnovAge Holding. It trades about -0.25 of its potential returns per unit of risk. InnovAge Holding Corp is currently generating about -0.17 per unit of risk. If you would invest  3,091  in Option Care Health on May 7, 2025 and sell it today you would lose (281.00) from holding Option Care Health or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Option Care Health  vs.  InnovAge Holding Corp

Option Care Health

Risk-Adjusted Performance

Weakest

Over the last 90 days Option Care Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

InnovAge Holding Corp

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in InnovAge Holding Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, InnovAge Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Option Care and InnovAge Holding

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

The idea behind Option Care Health and InnovAge Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.