Correlation Between Crawford and EHealth
Can any of the company-specific risk be diversified away by investing in both Crawford and EHealth 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 Crawford and EHealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crawford Company and eHealth, you can compare the effects of market volatilities on Crawford and EHealth 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 Crawford with a short position of EHealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crawford and EHealth.
Diversification Opportunities for Crawford and EHealth
Very poor diversification
The 3 months correlation between Crawford and EHealth is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and eHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eHealth and Crawford 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 Crawford Company are associated (or correlated) with EHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eHealth has no effect on the direction of Crawford i.e., Crawford and EHealth go up and down completely randomly.
Pair Corralation between Crawford and EHealth
Assuming the 90 days horizon Crawford is expected to generate 2.25 times less return on investment than EHealth. But when comparing it to its historical volatility, Crawford Company is 2.0 times less risky than EHealth. It trades about 0.1 of its potential returns per unit of risk. eHealth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 500.00 in eHealth on August 28, 2024 and sell it today you would earn a total of 45.00 from holding eHealth or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crawford Company vs. eHealth
Performance |
| Timeline |
| Crawford |
| eHealth |
Crawford and EHealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crawford and EHealth
The main advantage of trading using opposite Crawford and EHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crawford position performs unexpectedly, EHealth 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 EHealth will offset losses from the drop in EHealth's long position.| Crawford vs. CorVel Corp | Crawford vs. Erie Indemnity | Crawford vs. Willis Towers Watson | Crawford vs. Crawford Company |
| EHealth vs. GoHealth | EHealth vs. Tian Ruixiang Holdings | EHealth vs. Huize Holding | EHealth vs. CorVel Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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