Correlation Between EGF Theramed and HealthStream
Can any of the company-specific risk be diversified away by investing in both EGF Theramed and HealthStream 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 EGF Theramed and HealthStream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EGF Theramed Health and HealthStream, you can compare the effects of market volatilities on EGF Theramed and HealthStream 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 EGF Theramed with a short position of HealthStream. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGF Theramed and HealthStream.
Diversification Opportunities for EGF Theramed and HealthStream
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EGF and HealthStream is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding EGF Theramed Health and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream and EGF Theramed 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 EGF Theramed Health are associated (or correlated) with HealthStream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthStream has no effect on the direction of EGF Theramed i.e., EGF Theramed and HealthStream go up and down completely randomly.
Pair Corralation between EGF Theramed and HealthStream
Assuming the 90 days horizon EGF Theramed Health is expected to generate 20.7 times more return on investment than HealthStream. However, EGF Theramed is 20.7 times more volatile than HealthStream. It trades about 0.06 of its potential returns per unit of risk. HealthStream is currently generating about 0.05 per unit of risk. If you would invest 36.00 in EGF Theramed Health on August 30, 2024 and sell it today you would lose (15.00) from holding EGF Theramed Health or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
EGF Theramed Health vs. HealthStream
Performance |
| Timeline |
| EGF Theramed Health |
| HealthStream |
EGF Theramed and HealthStream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EGF Theramed and HealthStream
The main advantage of trading using opposite EGF Theramed and HealthStream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGF Theramed position performs unexpectedly, HealthStream 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 HealthStream will offset losses from the drop in HealthStream's long position.| EGF Theramed vs. Healthcare Triangle | EGF Theramed vs. Bullfrog AI Holdings, | EGF Theramed vs. Mednow Inc | EGF Theramed vs. Caduceus Software Systems |
| HealthStream vs. National Research Corp | HealthStream vs. Forian Inc | HealthStream vs. Streamline Health Solutions | HealthStream vs. Definitive Healthcare 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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