Correlation Between M3 and Health Catalyst
Can any of the company-specific risk be diversified away by investing in both M3 and Health Catalyst 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 M3 and Health Catalyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Inc and Health Catalyst, you can compare the effects of market volatilities on M3 and Health Catalyst 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 M3 with a short position of Health Catalyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 and Health Catalyst.
Diversification Opportunities for M3 and Health Catalyst
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between M3 and Health is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding M3 Inc and Health Catalyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Catalyst and M3 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 M3 Inc are associated (or correlated) with Health Catalyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Catalyst has no effect on the direction of M3 i.e., M3 and Health Catalyst go up and down completely randomly.
Pair Corralation between M3 and Health Catalyst
Assuming the 90 days horizon M3 Inc is expected to under-perform the Health Catalyst. But the pink sheet apears to be less risky and, when comparing its historical volatility, M3 Inc is 1.33 times less risky than Health Catalyst. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Health Catalyst is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Health Catalyst on September 1, 2024 and sell it today you would earn a total of 106.00 from holding Health Catalyst or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Inc vs. Health Catalyst
Performance |
| Timeline |
| M3 Inc |
| Health Catalyst |
M3 and Health Catalyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 and Health Catalyst
The main advantage of trading using opposite M3 and Health Catalyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 position performs unexpectedly, Health Catalyst 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 Health Catalyst will offset losses from the drop in Health Catalyst's long position.The idea behind M3 Inc and Health Catalyst 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.| Health Catalyst vs. National Research Corp | Health Catalyst vs. Certara | Health Catalyst vs. HealthStream | Health Catalyst vs. Forian 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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