Correlation Between Definitive Healthcare and SLR Investment

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

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

Diversification Opportunities for Definitive Healthcare and SLR Investment

0.06

Correlation Coefficient

Definitive Healthcare  SLR Investment

Significant diversification

The 3 months correlation between Definitive and SLR is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and Definitive 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 Definitive Healthcare Corp are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and SLR Investment go up and down completely randomly.

Pair Corralation between Definitive Healthcare and SLR Investment

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the SLR Investment. In addition to that, Definitive Healthcare is 3.66 times more volatile than SLR Investment Corp. It trades about -0.04 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.06 per unit of volatility. If you would invest  1,265  in SLR Investment Corp on October 22, 2024 and sell it today you would earn a total of  410.00  from holding SLR Investment Corp or generate 32.41% return on investment over 90 days.

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

Definitive Healthcare Corp  vs.  SLR Investment Corp

Definitive Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SLR Investment Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Definitive Healthcare and SLR Investment

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

The idea behind Definitive Healthcare Corp and SLR Investment Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.