Correlation Between Change Healthcare and Icad

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Can any of the company-specific risk be diversified away by investing in both Change Healthcare and Icad 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 Change Healthcare and Icad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Change Healthcare and Icad Inc, you can compare the effects of market volatilities on Change Healthcare and Icad 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 Change Healthcare with a short position of Icad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Change Healthcare and Icad.

Diversification Opportunities for Change Healthcare and Icad

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Change and Icad is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Change Healthcare and Icad Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icad Inc and Change Healthcare 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 Change Healthcare are associated (or correlated) with Icad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icad Inc has no effect on the direction of Change Healthcare i.e., Change Healthcare and Icad go up and down completely randomly.

Pair Corralation between Change Healthcare and Icad

Given the investment horizon of 90 days Change Healthcare is expected to generate 0.27 times more return on investment than Icad. However, Change Healthcare is 3.7 times less risky than Icad. It trades about 0.32 of its potential returns per unit of risk. Icad Inc is currently generating about -0.23 per unit of risk. If you would invest  2,279  in Change Healthcare on May 14, 2022 and sell it today you would earn a total of  164.00  from holding Change Healthcare or generate 7.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Change Healthcare  vs.  Icad Inc

 Performance (%) 
       Timeline  
Change Healthcare 
Change Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Change Healthcare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Change Healthcare may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Change Price Channel

Icad Inc 
Icad Performance
0 of 100
Over the last 90 days Icad Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Icad is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Icad Price Channel

Change Healthcare and Icad Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Change Healthcare and Icad

The main advantage of trading using opposite Change Healthcare and Icad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Change Healthcare position performs unexpectedly, Icad 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 Icad will offset losses from the drop in Icad's long position.

Change Healthcare

Pair trading matchups for Change Healthcare

The idea behind Change Healthcare and Icad Inc 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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