Correlation Between HealthStream and Progyny

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

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

Diversification Opportunities for HealthStream and Progyny

0.45

Correlation Coefficient

HealthStream  Progyny

Very weak diversification

The 3 months correlation between HealthStream and Progyny is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and Progyny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progyny 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 Progyny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progyny has no effect on the direction of HealthStream i.e., HealthStream and Progyny go up and down completely randomly.

Pair Corralation between HealthStream and Progyny

Given the investment horizon of 90 days HealthStream is expected to generate 17.85 times less return on investment than Progyny. But when comparing it to its historical volatility, HealthStream is 2.67 times less risky than Progyny. It trades about 0.03 of its potential returns per unit of risk. Progyny is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,559  in Progyny on December 2, 2024 and sell it today you would earn a total of  694.00  from holding Progyny or generate 44.52% return on investment over 90 days.

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

HealthStream  vs.  Progyny

HealthStream

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HealthStream are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HealthStream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Progyny

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Progyny are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Progyny showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HealthStream and Progyny

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

The idea behind HealthStream and Progyny 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.