Correlation Between HealthStream and Icad

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

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

Diversification Opportunities for HealthStream and Icad

0.39

Correlation Coefficient

HealthStream  Icad

Weak diversification

The 3 months correlation between HealthStream and Icad is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and icad inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on icad inc and HealthStream 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 HealthStream are associated (or correlated) with Icad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of icad inc has no effect on the direction of HealthStream i.e., HealthStream and Icad go up and down completely randomly.

Pair Corralation between HealthStream and Icad

Given the investment horizon of 90 days HealthStream is expected to generate 3.19 times less return on investment than Icad. But when comparing it to its historical volatility, HealthStream is 3.93 times less risky than Icad. It trades about 0.04 of its potential returns per unit of risk. icad inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  163.00  in icad inc on September 17, 2024 and sell it today you would earn a total of  32.00  from holding icad inc or generate 19.63% return on investment over 90 days.

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

HealthStream  vs.  icad inc

HealthStream

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HealthStream are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, HealthStream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

icad inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in icad inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Icad exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HealthStream and Icad

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

The idea behind HealthStream and icad 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.