Correlation Between SP 500 and Healthequity

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Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and Healthequity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 Technology and Healthequity, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of Healthequity. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Healthequity.

Diversification Opportunities for SP 500 and Healthequity

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between SP 500 and Healthequity is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 Technology and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity and SP 500 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 SP 500 Technology 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 SP 500 i.e., SP 500 and Healthequity go up and down completely randomly.

Pair Corralation between SP 500 and Healthequity

Considering the 90-day investment horizon SP 500 Technology is expected to under-perform the Healthequity. In addition to that, SP 500 is 1.09 times more volatile than Healthequity. It trades about -0.03 of its total potential returns per unit of risk. Healthequity is currently generating about 0.21 per unit of volatility. If you would invest  6,098  in Healthequity on March 27, 2022 and sell it today you would earn a total of  583.00  from holding Healthequity or generate 9.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SP 500 Technology  vs.  Healthequity

 Performance (%) 
      Timeline 
SP 500 Technology 
SP 500 Performance
0 of 100
Over the last 90 days SP 500 Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain fairly strong which may send shares a bit higher in July 2022. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

SP 500 Price Channel

Healthequity 
Healthequity Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Healthequity are ranked lower than 2 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Healthequity Price Channel

SP 500 and Healthequity Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with SP 500 and Healthequity

The main advantage of trading using opposite SP 500 and Healthequity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.

SP 500 Technology

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against SP 500 as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. SP 500's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, SP 500's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to SP 500 Technology.
The idea behind SP 500 Technology 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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