Correlation Between HEALTHSTREAM (HL5SG) and Apple
Can any of the company-specific risk be diversified away by investing in both HEALTHSTREAM (HL5SG) and Apple 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 HEALTHSTREAM (HL5SG) and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHSTREAM and Apple Inc, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) and Apple 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 HEALTHSTREAM (HL5SG) with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and Apple.
Diversification Opportunities for HEALTHSTREAM (HL5SG) and Apple
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HEALTHSTREAM and Apple is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and Apple go up and down completely randomly.
Pair Corralation between HEALTHSTREAM (HL5SG) and Apple
Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.6 times more return on investment than Apple. However, HEALTHSTREAM is 1.67 times less risky than Apple. It trades about 0.08 of its potential returns per unit of risk. Apple Inc is currently generating about -0.15 per unit of risk. If you would invest 3,080 in HEALTHSTREAM on November 5, 2024 and sell it today you would earn a total of 60.00 from holding HEALTHSTREAM or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
HEALTHSTREAM vs. Apple Inc
Performance |
| Timeline |
| HEALTHSTREAM (HL5SG) |
| Apple Inc |
HEALTHSTREAM (HL5SG) and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEALTHSTREAM (HL5SG) and Apple
The main advantage of trading using opposite HEALTHSTREAM (HL5SG) and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHSTREAM (HL5SG) position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| HEALTHSTREAM (HL5SG) vs. Mitsubishi Gas Chemical | HEALTHSTREAM (HL5SG) vs. Siamgas And Petrochemicals | HEALTHSTREAM (HL5SG) vs. China BlueChemical | HEALTHSTREAM (HL5SG) vs. SEKISUI CHEMICAL |
| Apple vs. AIR LIQUIDE ADR | Apple vs. Westinghouse Air Brake | Apple vs. RYANAIR HLDGS ADR | Apple vs. Air New Zealand |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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