Correlation Between GoHealth and Stagwell

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

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

Diversification Opportunities for GoHealth and Stagwell

0.21

Correlation Coefficient

GoHealth  Stagwell

Modest diversification

The 3 months correlation between GoHealth and Stagwell is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GoHealth and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and GoHealth 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 GoHealth are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of GoHealth i.e., GoHealth and Stagwell go up and down completely randomly.

Pair Corralation between GoHealth and Stagwell

Given the investment horizon of 90 days GoHealth is expected to generate 1.7 times more return on investment than Stagwell. However, GoHealth is 1.7 times more volatile than Stagwell. It trades about 0.19 of its potential returns per unit of risk. Stagwell is currently generating about 0.09 per unit of risk. If you would invest  839.00  in GoHealth on September 3, 2024 and sell it today you would earn a total of  442.00  from holding GoHealth or generate 52.68% return on investment over 90 days.

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

GoHealth  vs.  Stagwell

GoHealth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GoHealth are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, GoHealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Stagwell

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Stagwell showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoHealth and Stagwell

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

The idea behind GoHealth and Stagwell 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 Global Correlations module to find global opportunities by holding instruments from different markets.