Correlation Between American Well and Doximity
Can any of the company-specific risk be diversified away by investing in both American Well and Doximity 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 American Well and Doximity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Well Corp and Doximity, you can compare the effects of market volatilities on American Well and Doximity 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 American Well with a short position of Doximity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Well and Doximity.
Diversification Opportunities for American Well and Doximity
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Doximity is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Well Corp and Doximity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doximity and American Well 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 American Well Corp are associated (or correlated) with Doximity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doximity has no effect on the direction of American Well i.e., American Well and Doximity go up and down completely randomly.
Pair Corralation between American Well and Doximity
Given the investment horizon of 90 days American Well Corp is expected to under-perform the Doximity. But the stock apears to be less risky and, when comparing its historical volatility, American Well Corp is 2.03 times less risky than Doximity. The stock trades about -0.06 of its potential returns per unit of risk. The Doximity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,142 in Doximity on August 28, 2024 and sell it today you would earn a total of 733.00 from holding Doximity or generate 17.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Well Corp vs. Doximity
Performance |
| Timeline |
| American Well Corp |
| Doximity |
American Well and Doximity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Well and Doximity
The main advantage of trading using opposite American Well and Doximity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Well position performs unexpectedly, Doximity 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 Doximity will offset losses from the drop in Doximity's long position.| American Well vs. Doximity | American Well vs. Certara | American Well vs. Teladoc | American Well vs. Definitive Healthcare Corp |
| Doximity vs. HealthStream | Doximity vs. National Research Corp | Doximity vs. Forian Inc | Doximity vs. HealthEquity |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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