Correlation Between Definitive Healthcare and SIMON

Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare and SIMON 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 SIMON 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 SIMON PROPERTY GROUP, you can compare the effects of market volatilities on Definitive Healthcare and SIMON 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 SIMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and SIMON.

Diversification Opportunities for Definitive Healthcare and SIMON

0.52

Correlation Coefficient

Definitive Healthcare  SIMON

Very weak diversification

The 3 months correlation between Definitive and SIMON is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and SIMON PROPERTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PROPERTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PROPERTY GROUP has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and SIMON go up and down completely randomly.

Pair Corralation between Definitive Healthcare and SIMON

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 12.22 times more return on investment than SIMON. However, Definitive Healthcare is 12.22 times more volatile than SIMON PROPERTY GROUP. It trades about 0.19 of its potential returns per unit of risk. SIMON PROPERTY GROUP is currently generating about 0.21 per unit of risk. If you would invest  413.00  in Definitive Healthcare Corp on October 25, 2024 and sell it today you would earn a total of  58.00  from holding Definitive Healthcare Corp or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

Definitive Healthcare Corp  vs.  SIMON PROPERTY GROUP

Definitive Healthcare

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Definitive Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SIMON PROPERTY GROUP

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIMON PROPERTY GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Definitive Healthcare and SIMON

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

The idea behind Definitive Healthcare Corp and SIMON PROPERTY GROUP 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 Stocks Directory module to find actively traded stocks across global markets.