Correlation Between MODIVCARE INC and Garofalo Health

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

By analyzing existing cross correlation between MODIVCARE INC DL 001 and Garofalo Health Care, you can compare the effects of market volatilities on MODIVCARE INC and Garofalo 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 MODIVCARE INC with a short position of Garofalo Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of MODIVCARE INC and Garofalo Health.

Diversification Opportunities for MODIVCARE INC and Garofalo Health

-0.38

Correlation Coefficient

MODIVCARE INC  Garofalo Health

Very good diversification

The 3 months correlation between MODIVCARE and Garofalo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MODIVCARE INC DL 001 and Garofalo Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garofalo Health Care and MODIVCARE INC 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 MODIVCARE INC DL 001 are associated (or correlated) with Garofalo Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garofalo Health Care has no effect on the direction of MODIVCARE INC i.e., MODIVCARE INC and Garofalo Health go up and down completely randomly.

Pair Corralation between MODIVCARE INC and Garofalo Health

Assuming the 90 days trading horizon MODIVCARE INC DL 001 is expected to generate 14.98 times more return on investment than Garofalo Health. However, MODIVCARE INC is 14.98 times more volatile than Garofalo Health Care. It trades about 0.19 of its potential returns per unit of risk. Garofalo Health Care is currently generating about -0.02 per unit of risk. If you would invest  62.00  in MODIVCARE INC DL 001 on April 21, 2025 and sell it today you would earn a total of  190.00  from holding MODIVCARE INC DL 001 or generate 306.45% return on investment over 90 days.

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

MODIVCARE INC DL 001  vs.  Garofalo Health Care

MODIVCARE INC DL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MODIVCARE INC DL 001 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, MODIVCARE INC reported solid returns over the last few months and may actually be approaching a breakup point.

Garofalo Health Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garofalo Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Garofalo Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MODIVCARE INC and Garofalo Health

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

The idea behind MODIVCARE INC DL 001 and Garofalo 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.