Correlation Between HealthEquity and GE HealthCare

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

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

Diversification Opportunities for HealthEquity and GE HealthCare

0.8

Correlation Coefficient

HealthEquity  GE HealthCare

Very poor diversification

The 3 months correlation between HealthEquity and GEHC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and GE HealthCare Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE HealthCare Techno and HealthEquity 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 HealthEquity are associated (or correlated) with GE HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE HealthCare Techno has no effect on the direction of HealthEquity i.e., HealthEquity and GE HealthCare go up and down completely randomly.

Pair Corralation between HealthEquity and GE HealthCare

Considering the 90-day investment horizon HealthEquity is expected to under-perform the GE HealthCare. In addition to that, HealthEquity is 1.69 times more volatile than GE HealthCare Technologies. It trades about -0.04 of its total potential returns per unit of risk. GE HealthCare Technologies is currently generating about 0.03 per unit of volatility. If you would invest  7,857  in GE HealthCare Technologies on December 30, 2024 and sell it today you would earn a total of  144.00  from holding GE HealthCare Technologies or generate 1.83% return on investment over 90 days.

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

HealthEquity  vs.  GE HealthCare Technologies

HealthEquity

Risk-Adjusted Performance

Very Weak

Over the last 90 days HealthEquity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GE HealthCare Techno

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE HealthCare Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, GE HealthCare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HealthEquity and GE HealthCare

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

The idea behind HealthEquity and GE HealthCare Technologies 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.