Correlation Between Evolent Health and Entravision Communications

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

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

Diversification Opportunities for Evolent Health and Entravision Communications

0.54

Correlation Coefficient

Evolent Health  Entravision Communications

Very weak diversification

The 3 months correlation between Evolent and Entravision is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and Evolent Health 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 Evolent Health are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Evolent Health i.e., Evolent Health and Entravision Communications go up and down completely randomly.

Pair Corralation between Evolent Health and Entravision Communications

Assuming the 90 days horizon Evolent Health is expected to generate 2.43 times less return on investment than Entravision Communications. In addition to that, Evolent Health is 1.42 times more volatile than Entravision Communications. It trades about 0.03 of its total potential returns per unit of risk. Entravision Communications is currently generating about 0.12 per unit of volatility. If you would invest  158.00  in Entravision Communications on April 24, 2025 and sell it today you would earn a total of  40.00  from holding Entravision Communications or generate 25.32% return on investment over 90 days.

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

Evolent Health  vs.  Entravision Communications

Evolent Health

Risk-Adjusted Performance

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 nearly fragile basic indicators, Evolent Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Entravision Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolent Health and Entravision Communications

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

The idea behind Evolent Health and Entravision Communications 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.