Correlation Between Evolent Health and Sabra Health

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

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

Diversification Opportunities for Evolent Health and Sabra Health

0.21

Correlation Coefficient

Evolent Health  Sabra Health

Modest diversification

The 3 months correlation between Evolent and Sabra is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Evolent Health and Sabra Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Health Care 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 Sabra Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Health Care has no effect on the direction of Evolent Health i.e., Evolent Health and Sabra Health go up and down completely randomly.

Pair Corralation between Evolent Health and Sabra Health

Assuming the 90 days horizon Evolent Health is expected to generate 3.08 times more return on investment than Sabra Health. However, Evolent Health is 3.08 times more volatile than Sabra Health Care. It trades about 0.03 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.03 per unit of risk. If you would invest  785.00  in Evolent Health on April 24, 2025 and sell it today you would earn a total of  25.00  from holding Evolent Health or generate 3.18% return on investment over 90 days.

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

Evolent Health  vs.  Sabra Health Care

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.

Sabra Health Care

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Health Care are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sabra Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Evolent Health and Sabra Health

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

The idea behind Evolent Health and Sabra Health Care 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.