Correlation Between GE HealthCare and Definitive Healthcare
Can any of the company-specific risk be diversified away by investing in both GE HealthCare and Definitive Healthcare 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 GE HealthCare and Definitive Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE HealthCare Technologies and Definitive Healthcare Corp, you can compare the effects of market volatilities on GE HealthCare and Definitive Healthcare 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 GE HealthCare with a short position of Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE HealthCare and Definitive Healthcare.
Diversification Opportunities for GE HealthCare and Definitive Healthcare
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEHC and Definitive is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GE HealthCare Technologies and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare and GE 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 GE HealthCare Technologies are associated (or correlated) with Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of GE HealthCare i.e., GE HealthCare and Definitive Healthcare go up and down completely randomly.
Pair Corralation between GE HealthCare and Definitive Healthcare
Given the investment horizon of 90 days GE HealthCare Technologies is expected to under-perform the Definitive Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, GE HealthCare Technologies is 1.84 times less risky than Definitive Healthcare. The stock trades about -0.14 of its potential returns per unit of risk. The Definitive Healthcare Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 416.00 in Definitive Healthcare Corp on August 31, 2024 and sell it today you would earn a total of 57.00 from holding Definitive Healthcare Corp or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE HealthCare Technologies vs. Definitive Healthcare Corp
Performance |
| Timeline |
| GE HealthCare Techno |
| Definitive Healthcare |
GE HealthCare and Definitive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE HealthCare and Definitive Healthcare
The main advantage of trading using opposite GE HealthCare and Definitive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE HealthCare position performs unexpectedly, Definitive Healthcare 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 Definitive Healthcare will offset losses from the drop in Definitive Healthcare's long position.| GE HealthCare vs. Teladoc | GE HealthCare vs. Veeva Systems Class | GE HealthCare vs. 10X Genomics | GE HealthCare vs. Progyny |
| Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health Group | Definitive Healthcare vs. HealthStream |
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 Stocks Directory module to find actively traded stocks across global markets.
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