Correlation Between American Well and Progyny

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

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

Diversification Opportunities for American Well and Progyny

0.7

Correlation Coefficient

American Well  Progyny

Poor diversification

The 3 months correlation between American and Progyny is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding American Well Corp and Progyny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progyny and American Well 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 American Well Corp are associated (or correlated) with Progyny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progyny has no effect on the direction of American Well i.e., American Well and Progyny go up and down completely randomly.

Pair Corralation between American Well and Progyny

Given the investment horizon of 90 days American Well is expected to generate 2.22 times less return on investment than Progyny. In addition to that, American Well is 2.24 times more volatile than Progyny. It trades about 0.04 of its total potential returns per unit of risk. Progyny is currently generating about 0.19 per unit of volatility. If you would invest  1,693  in Progyny on December 30, 2024 and sell it today you would earn a total of  497.00  from holding Progyny or generate 29.36% return on investment over 90 days.

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

American Well Corp  vs.  Progyny

American Well Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Well Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, American Well may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Progyny

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Progyny are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Progyny showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Well and Progyny

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

The idea behind American Well Corp and Progyny 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.