Correlation Between Definitive Healthcare and BankUnited

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

Diversification Opportunities for Definitive Healthcare and BankUnited

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Definitive and BankUnited is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited and Definitive 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 Definitive Healthcare Corp are associated (or correlated) with BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and BankUnited go up and down completely randomly.

Pair Corralation between Definitive Healthcare and BankUnited

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 2.6 times more return on investment than BankUnited. However, Definitive Healthcare is 2.6 times more volatile than BankUnited. It trades about 0.11 of its potential returns per unit of risk. BankUnited is currently generating about 0.17 per unit of risk. If you would invest  1,920  in Definitive Healthcare Corp on May 16, 2022 and sell it today you would earn a total of  371.00  from holding Definitive Healthcare Corp or generate 19.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Definitive Healthcare Corp  vs.  BankUnited

 Performance (%) 
       Timeline  
Definitive Healthcare 
Definitive Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, Definitive Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Definitive Price Channel

BankUnited 
BankUnited Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, BankUnited may actually be approaching a critical reversion point that can send shares even higher in September 2022.

BankUnited Price Channel

Definitive Healthcare and BankUnited Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Definitive Healthcare and BankUnited

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

Definitive Healthcare Corp

Pair trading matchups for Definitive Healthcare

The idea behind Definitive Healthcare Corp and BankUnited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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