Correlation Between HealthEquity and Privia Health

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

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

Diversification Opportunities for HealthEquity and Privia Health

0.37

Correlation Coefficient

HealthEquity  Privia Health

Weak diversification

The 3 months correlation between HealthEquity and Privia is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group 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 Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of HealthEquity i.e., HealthEquity and Privia Health go up and down completely randomly.

Pair Corralation between HealthEquity and Privia Health

Considering the 90-day investment horizon HealthEquity is expected to under-perform the Privia Health. In addition to that, HealthEquity is 1.43 times more volatile than Privia Health Group. It trades about -0.04 of its total potential returns per unit of risk. Privia Health Group is currently generating about 0.13 per unit of volatility. If you would invest  1,947  in Privia Health Group on December 30, 2024 and sell it today you would earn a total of  312.00  from holding Privia Health Group or generate 16.02% return on investment over 90 days.

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

HealthEquity  vs.  Privia Health Group

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.

Privia Health Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HealthEquity and Privia Health

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

The idea behind HealthEquity and Privia Health Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.