Correlation Between Definitive Healthcare and DHI
Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare and DHI 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 Definitive Healthcare and DHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definitive Healthcare Corp and DHI Group, you can compare the effects of market volatilities on Definitive Healthcare and DHI 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 Definitive Healthcare with a short position of DHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and DHI.
Diversification Opportunities for Definitive Healthcare and DHI
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Definitive and DHI is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group and Definitive Healthcare 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 Definitive Healthcare Corp are associated (or correlated) with DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and DHI go up and down completely randomly.
Pair Corralation between Definitive Healthcare and DHI
Allowing for the 90-day total investment horizon Definitive Healthcare is expected to generate 2.53 times less return on investment than DHI. But when comparing it to its historical volatility, Definitive Healthcare Corp is 1.14 times less risky than DHI. It trades about 0.19 of its potential returns per unit of risk. DHI Group is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 180.00 in DHI Group on October 28, 2024 and sell it today you would earn a total of 76.00 from holding DHI Group or generate 42.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definitive Healthcare Corp vs. DHI Group
Performance |
| Timeline |
| Definitive Healthcare |
| DHI Group |
Definitive Healthcare and DHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definitive Healthcare and DHI
The main advantage of trading using opposite Definitive Healthcare and DHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare position performs unexpectedly, DHI 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 DHI will offset losses from the drop in DHI's long position.| Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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