Correlation Between Healthequity and Change Healthcare

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

Diversification Opportunities for Healthequity and Change Healthcare

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Healthequity and Change is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Healthequity and Change Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Change Healthcare and Healthequity 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 Healthequity are associated (or correlated) with Change Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Change Healthcare has no effect on the direction of Healthequity i.e., Healthequity and Change Healthcare go up and down completely randomly.

Pair Corralation between Healthequity and Change Healthcare

Considering the 90-day investment horizon Healthequity is expected to generate 1.57 times less return on investment than Change Healthcare. In addition to that, Healthequity is 2.61 times more volatile than Change Healthcare. It trades about 0.02 of its total potential returns per unit of risk. Change Healthcare is currently generating about 0.08 per unit of volatility. If you would invest  2,200  in Change Healthcare on July 2, 2022 and sell it today you would earn a total of  549.00  from holding Change Healthcare or generate 24.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Healthequity  vs.  Change Healthcare

 Performance (%) 
       Timeline  
Healthequity 
Healthequity Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Healthequity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Healthequity showed solid returns over the last few months and may actually be approaching a breakup point.

Healthequity Price Channel

Change Healthcare 
Change Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Change Healthcare are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Change Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Change Price Channel

Healthequity and Change Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Healthequity and Change Healthcare

The main advantage of trading using opposite Healthequity and Change Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthequity position performs unexpectedly, Change Healthcare 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 Change Healthcare will offset losses from the drop in Change Healthcare's long position.
Healthequity vs. Amazon Inc
The idea behind Healthequity and Change Healthcare 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.
Change Healthcare vs. Amazon 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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