Correlation Between Phreesia and Evolent Health

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

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

Diversification Opportunities for Phreesia and Evolent Health

0.52

Correlation Coefficient

Phreesia  Evolent Health

Very weak diversification

The 3 months correlation between Phreesia and Evolent is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Phreesia and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Phreesia 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 Phreesia are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of Phreesia i.e., Phreesia and Evolent Health go up and down completely randomly.

Pair Corralation between Phreesia and Evolent Health

Considering the 90-day investment horizon Phreesia is expected to under-perform the Evolent Health. But the stock apears to be less risky and, when comparing its historical volatility, Phreesia is 1.4 times less risky than Evolent Health. The stock trades about -0.46 of its potential returns per unit of risk. The Evolent Health is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest  2,894  in Evolent Health on July 28, 2024 and sell it today you would lose (492.00) from holding Evolent Health or give up 17.0% of portfolio value over 90 days.

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

Phreesia  vs.  Evolent Health

Phreesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phreesia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Evolent Health

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolent Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Evolent Health may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Phreesia and Evolent Health

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

The idea behind Phreesia and Evolent Health 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..