Correlation Between AMN Healthcare and HealthEquity

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

By analyzing existing cross correlation between AMN Healthcare Services and HealthEquity, you can compare the effects of market volatilities on AMN Healthcare 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 AMN Healthcare with a short position of HealthEquity. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMN Healthcare and HealthEquity.

Diversification Opportunities for AMN Healthcare and HealthEquity

-0.9

Correlation Coefficient

AMN Healthcare  HealthEquity

Pay attention - limited upside

The 3 months correlation between AMN and HealthEquity is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and AMN 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 AMN Healthcare Services 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 AMN Healthcare i.e., AMN Healthcare and HealthEquity go up and down completely randomly.

Pair Corralation between AMN Healthcare and HealthEquity

Considering the 90-day investment horizon AMN Healthcare Services is expected to under-perform the HealthEquity. In addition to that, AMN Healthcare is 2.23 times more volatile than HealthEquity. It trades about -0.14 of its total potential returns per unit of risk. HealthEquity is currently generating about 0.15 per unit of volatility. If you would invest  7,880  in HealthEquity on September 17, 2024 and sell it today you would earn a total of  1,682  from holding HealthEquity or generate 21.35% return on investment over 90 days.

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

AMN Healthcare Services  vs.  HealthEquity

AMN Healthcare Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

HealthEquity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, HealthEquity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMN Healthcare and HealthEquity

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

The idea behind AMN Healthcare Services 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 the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.