Correlation Between CareMax and HealthEquity

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

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

Diversification Opportunities for CareMax and HealthEquity

-0.28

Correlation Coefficient

CareMax  HealthEquity

Very good diversification

The 3 months correlation between CareMax and HealthEquity is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and CareMax 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 CareMax 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 CareMax i.e., CareMax and HealthEquity go up and down completely randomly.

Pair Corralation between CareMax and HealthEquity

Given the investment horizon of 90 days CareMax is expected to generate 10.6 times more return on investment than HealthEquity. However, CareMax is 10.6 times more volatile than HealthEquity. It trades about 0.0 of its potential returns per unit of risk. HealthEquity is currently generating about -0.04 per unit of risk. If you would invest  1.30  in CareMax on December 30, 2024 and sell it today you would lose (1.29) from holding CareMax or give up 99.23% of portfolio value over 90 days.

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

CareMax  vs.  HealthEquity

CareMax

Risk-Adjusted Performance

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CareMax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 CareMax and HealthEquity

The main advantage of trading using opposite CareMax and HealthEquity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax 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 CareMax 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.