Correlation Between EHealth and Arthur J

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

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

Diversification Opportunities for EHealth and Arthur J

-0.32

Correlation Coefficient

EHealth  Arthur J

Very good diversification

The 3 months correlation between EHealth and Arthur is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding eHealth and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and EHealth 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 eHealth are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of EHealth i.e., EHealth and Arthur J go up and down completely randomly.

Pair Corralation between EHealth and Arthur J

Given the investment horizon of 90 days eHealth is expected to generate 4.3 times more return on investment than Arthur J. However, EHealth is 4.3 times more volatile than Arthur J Gallagher. It trades about 0.03 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.08 per unit of risk. If you would invest  801.00  in eHealth on October 21, 2024 and sell it today you would earn a total of  204.00  from holding eHealth or generate 25.47% return on investment over 90 days.

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

eHealth  vs.  Arthur J Gallagher

eHealth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in eHealth are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, EHealth demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Arthur J Gallagher

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Arthur J is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EHealth and Arthur J

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

The idea behind eHealth and Arthur J Gallagher 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.