Correlation Between Chegg and NIGHTINGALE HEALTH

Can any of the company-specific risk be diversified away by investing in both Chegg and NIGHTINGALE HEALTH 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 Chegg and NIGHTINGALE HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chegg Inc and NIGHTINGALE HEALTH EO, you can compare the effects of market volatilities on Chegg and NIGHTINGALE HEALTH 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 Chegg with a short position of NIGHTINGALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chegg and NIGHTINGALE HEALTH.

Diversification Opportunities for Chegg and NIGHTINGALE HEALTH

-0.43

Correlation Coefficient

Chegg  NIGHTINGALE HEALTH

Very good diversification

The 3 months correlation between Chegg and NIGHTINGALE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chegg Inc and NIGHTINGALE HEALTH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGHTINGALE HEALTH and Chegg 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 Chegg Inc are associated (or correlated) with NIGHTINGALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGHTINGALE HEALTH has no effect on the direction of Chegg i.e., Chegg and NIGHTINGALE HEALTH go up and down completely randomly.

Pair Corralation between Chegg and NIGHTINGALE HEALTH

Assuming the 90 days horizon Chegg Inc is expected to under-perform the NIGHTINGALE HEALTH. In addition to that, Chegg is 2.01 times more volatile than NIGHTINGALE HEALTH EO. It trades about -0.29 of its total potential returns per unit of risk. NIGHTINGALE HEALTH EO is currently generating about 0.06 per unit of volatility. If you would invest  293.00  in NIGHTINGALE HEALTH EO on October 10, 2024 and sell it today you would earn a total of  7.00  from holding NIGHTINGALE HEALTH EO or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chegg Inc  vs.  NIGHTINGALE HEALTH EO

Chegg Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chegg Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chegg reported solid returns over the last few months and may actually be approaching a breakup point.

NIGHTINGALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIGHTINGALE HEALTH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NIGHTINGALE HEALTH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Chegg and NIGHTINGALE HEALTH

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

The idea behind Chegg Inc and NIGHTINGALE HEALTH EO 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.

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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 the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.