Correlation Between HealthStream and Dow Jones
Can any of the company-specific risk be diversified away by investing in both HealthStream and Dow Jones 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 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HealthStream and Dow Jones Industrial, you can compare the effects of market volatilities on HealthStream and Dow Jones 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 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of HealthStream and Dow Jones.
Diversification Opportunities for HealthStream and Dow Jones
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HealthStream and Dow is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and HealthStream 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of HealthStream i.e., HealthStream and Dow Jones go up and down completely randomly.
Pair Corralation between HealthStream and Dow Jones
Given the investment horizon of 90 days HealthStream is expected to generate 2.23 times more return on investment than Dow Jones. However, HealthStream is 2.23 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 2,551 in HealthStream on November 9, 2024 and sell it today you would earn a total of 754.00 from holding HealthStream or generate 29.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
HealthStream vs. Dow Jones Industrial
Performance |
| Timeline |
HealthStream and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
HealthStream
Pair trading matchups for HealthStream
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with HealthStream and Dow Jones
The main advantage of trading using opposite HealthStream and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HealthStream position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| HealthStream vs. National Research Corp | HealthStream vs. Forian Inc | HealthStream vs. Streamline Health Solutions | HealthStream vs. Definitive Healthcare Corp |
| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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