Correlation Between HealthStream and HealthEquity
Can any of the company-specific risk be diversified away by investing in both HealthStream and HealthEquity 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 HealthEquity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HealthStream and HealthEquity, you can compare the effects of market volatilities on HealthStream and HealthEquity 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 HealthEquity. Check out your portfolio center. Please also check ongoing floating volatility patterns of HealthStream and HealthEquity.
Diversification Opportunities for HealthStream and HealthEquity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HealthStream and HealthEquity is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity 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 HealthEquity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthEquity has no effect on the direction of HealthStream i.e., HealthStream and HealthEquity go up and down completely randomly.
Pair Corralation between HealthStream and HealthEquity
Given the investment horizon of 90 days HealthStream is expected to generate 1.71 times less return on investment than HealthEquity. But when comparing it to its historical volatility, HealthStream is 1.3 times less risky than HealthEquity. It trades about 0.05 of its potential returns per unit of risk. HealthEquity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,654 in HealthEquity on October 20, 2024 and sell it today you would earn a total of 2,588 from holding HealthEquity or generate 33.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HealthStream vs. HealthEquity
Performance |
| Timeline |
| HealthStream |
| HealthEquity |
HealthStream and HealthEquity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HealthStream and HealthEquity
The main advantage of trading using opposite HealthStream and HealthEquity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HealthStream position performs unexpectedly, HealthEquity 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 HealthEquity will offset losses from the drop in HealthEquity's long position.| HealthStream vs. National Research Corp | HealthStream vs. Forian Inc | HealthStream vs. Streamline Health Solutions | HealthStream vs. Definitive Healthcare Corp |
| HealthEquity vs. Ollies Bargain Outlet | HealthEquity vs. Appfolio | HealthEquity vs. Grand Canyon Education | HealthEquity vs. Globus Medical |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |