Correlation Between GoodRx Holdings and Healthequity

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

Diversification Opportunities for GoodRx Holdings and Healthequity

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between GoodRx and Healthequity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GoodRx Holdings Inc and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity and GoodRx Holdings 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 GoodRx Holdings 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 GoodRx Holdings i.e., GoodRx Holdings and Healthequity go up and down completely randomly.

Pair Corralation between GoodRx Holdings and Healthequity

Given the investment horizon of 90 days GoodRx Holdings is expected to generate 1.8 times more return on investment than Healthequity. However, GoodRx Holdings is 1.8 times more volatile than Healthequity. It trades about 0.06 of its potential returns per unit of risk. Healthequity is currently generating about -0.1 per unit of risk. If you would invest  591.00  in GoodRx Holdings on May 21, 2022 and sell it today you would earn a total of  44.00  from holding GoodRx Holdings or generate 7.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GoodRx Holdings Inc  vs.  Healthequity

 Performance (%) 
       Timeline  
GoodRx Holdings 
GoodRx Performance
0 of 100
Over the last 90 days GoodRx Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

GoodRx Price Channel

Healthequity 
Healthequity Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Healthequity are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Healthequity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Healthequity Price Channel

GoodRx Holdings and Healthequity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GoodRx Holdings and Healthequity

The main advantage of trading using opposite GoodRx Holdings and Healthequity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoodRx Holdings 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.

GoodRx Holdings

Pair trading matchups for GoodRx Holdings

The idea behind GoodRx Holdings and Healthequity 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.

Healthequity

Pair trading matchups for Healthequity

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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