Correlation Between Kelly Services and HealthEquity

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

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

Diversification Opportunities for Kelly Services and HealthEquity

-0.9

Correlation Coefficient

Kelly Services  HealthEquity

Pay attention - limited upside

The 3 months correlation between Kelly and HealthEquity is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kelly Services A and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and Kelly Services 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 Kelly Services A are associated (or correlated) with HealthEquity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthEquity has no effect on the direction of Kelly Services i.e., Kelly Services and HealthEquity go up and down completely randomly.

Pair Corralation between Kelly Services and HealthEquity

Assuming the 90 days horizon Kelly Services A is expected to generate 1.01 times more return on investment than HealthEquity. However, Kelly Services is 1.01 times more volatile than HealthEquity. It trades about -0.05 of its potential returns per unit of risk. HealthEquity is currently generating about -0.2 per unit of risk. If you would invest  1,409  in Kelly Services A on September 17, 2024 and sell it today you would lose (26.00) from holding Kelly Services A or give up 1.85% of portfolio value over 90 days.

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

Kelly Services A  vs.  HealthEquity

Kelly Services A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kelly Services A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HealthEquity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, HealthEquity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kelly Services and HealthEquity

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

The idea behind Kelly Services A and HealthEquity 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.