Correlation Between GE HealthCare and HealthEquity

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

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

Diversification Opportunities for GE HealthCare and HealthEquity

0.87

Correlation Coefficient

GE HealthCare  HealthEquity

Very poor diversification

The 3 months correlation between GEHC and HealthEquity is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GE HealthCare Technologies and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and GE 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 GE HealthCare Technologies 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 GE HealthCare i.e., GE HealthCare and HealthEquity go up and down completely randomly.

Pair Corralation between GE HealthCare and HealthEquity

Given the investment horizon of 90 days GE HealthCare Technologies is expected to generate 1.01 times more return on investment than HealthEquity. However, GE HealthCare is 1.01 times more volatile than HealthEquity. It trades about 0.1 of its potential returns per unit of risk. HealthEquity is currently generating about 0.05 per unit of risk. If you would invest  8,319  in GE HealthCare Technologies on November 29, 2024 and sell it today you would earn a total of  752.00  from holding GE HealthCare Technologies or generate 9.04% return on investment over 90 days.

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

GE HealthCare Technologies  vs.  HealthEquity

GE HealthCare Techno

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GE HealthCare Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, GE HealthCare may actually be approaching a critical reversion point that can send shares even higher in March 2025.

HealthEquity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, HealthEquity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE HealthCare and HealthEquity

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

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.