Correlation Between EHEALTH and WINDSTREAM HLDGS
Can any of the company-specific risk be diversified away by investing in both EHEALTH and WINDSTREAM HLDGS 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 EHEALTH and WINDSTREAM HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and WINDSTREAM HLDGS, you can compare the effects of market volatilities on EHEALTH and WINDSTREAM HLDGS 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 EHEALTH with a short position of WINDSTREAM HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and WINDSTREAM HLDGS.
Diversification Opportunities for EHEALTH and WINDSTREAM HLDGS
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EHEALTH and WINDSTREAM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and WINDSTREAM HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINDSTREAM HLDGS and EHEALTH 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 EHEALTH are associated (or correlated) with WINDSTREAM HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINDSTREAM HLDGS has no effect on the direction of EHEALTH i.e., EHEALTH and WINDSTREAM HLDGS go up and down completely randomly.
Pair Corralation between EHEALTH and WINDSTREAM HLDGS
Assuming the 90 days trading horizon EHEALTH is expected to generate 0.73 times more return on investment than WINDSTREAM HLDGS. However, EHEALTH is 1.36 times less risky than WINDSTREAM HLDGS. It trades about 0.24 of its potential returns per unit of risk. WINDSTREAM HLDGS is currently generating about -0.18 per unit of risk. If you would invest 358.00 in EHEALTH on September 29, 2024 and sell it today you would earn a total of 466.00 from holding EHEALTH or generate 130.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EHEALTH vs. WINDSTREAM HLDGS
Performance |
| Timeline |
| EHEALTH |
| WINDSTREAM HLDGS |
EHEALTH and WINDSTREAM HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and WINDSTREAM HLDGS
The main advantage of trading using opposite EHEALTH and WINDSTREAM HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH position performs unexpectedly, WINDSTREAM HLDGS 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 WINDSTREAM HLDGS will offset losses from the drop in WINDSTREAM HLDGS's long position.The idea behind EHEALTH and WINDSTREAM HLDGS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| WINDSTREAM HLDGS vs. Apple Inc | WINDSTREAM HLDGS vs. Apple Inc | WINDSTREAM HLDGS vs. Apple Inc | WINDSTREAM HLDGS vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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