Correlation Between Certara and HealthEquity

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

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

Diversification Opportunities for Certara and HealthEquity

0.89

Correlation Coefficient

Certara  HealthEquity

Very poor diversification

The 3 months correlation between Certara and HealthEquity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Certara and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and Certara 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 Certara 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 Certara i.e., Certara and HealthEquity go up and down completely randomly.

Pair Corralation between Certara and HealthEquity

Given the investment horizon of 90 days Certara is expected to generate 0.99 times more return on investment than HealthEquity. However, Certara is 1.01 times less risky than HealthEquity. It trades about -0.03 of its potential returns per unit of risk. HealthEquity is currently generating about -0.04 per unit of risk. If you would invest  1,065  in Certara on December 31, 2024 and sell it today you would lose (74.00) from holding Certara or give up 6.95% of portfolio value over 90 days.

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

Certara  vs.  HealthEquity

Certara

Risk-Adjusted Performance

Very Weak

Over the last 90 days Certara has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Certara is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

HealthEquity

Risk-Adjusted Performance

Very Weak

Over the last 90 days HealthEquity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Certara and HealthEquity

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

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.