Correlation Between HealthEquity and M3

Can any of the company-specific risk be diversified away by investing in both HealthEquity and M3 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 M3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HealthEquity and M3 Inc, you can compare the effects of market volatilities on HealthEquity and M3 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 M3. Check out your portfolio center. Please also check ongoing floating volatility patterns of HealthEquity and M3.

Diversification Opportunities for HealthEquity and M3

0.53

Correlation Coefficient

HealthEquity  M3

Very weak diversification

The 3 months correlation between HealthEquity and M3 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and M3 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Inc 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 M3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Inc has no effect on the direction of HealthEquity i.e., HealthEquity and M3 go up and down completely randomly.

Pair Corralation between HealthEquity and M3

Considering the 90-day investment horizon HealthEquity is expected to generate 2.29 times less return on investment than M3. But when comparing it to its historical volatility, HealthEquity is 1.72 times less risky than M3. It trades about 0.08 of its potential returns per unit of risk. M3 Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  496.00  in M3 Inc on December 1, 2024 and sell it today you would earn a total of  92.00  from holding M3 Inc or generate 18.55% return on investment over 90 days.

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

HealthEquity  vs.  M3 Inc

HealthEquity

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, HealthEquity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

M3 Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, M3 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HealthEquity and M3

The main advantage of trading using opposite HealthEquity and M3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HealthEquity position performs unexpectedly, M3 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 M3 will offset losses from the drop in M3's long position.

The idea behind HealthEquity and M3 Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.