Correlation Between Nextgen Healthcare and HealthEquity

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

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

Diversification Opportunities for Nextgen Healthcare and HealthEquity

0.0

Correlation Coefficient

Nextgen Healthcare  HealthEquity

Pay attention - limited upside

The 3 months correlation between Nextgen and HealthEquity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nextgen Healthcare and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and Nextgen Healthcare 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 Nextgen Healthcare 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 Nextgen Healthcare i.e., Nextgen Healthcare and HealthEquity go up and down completely randomly.

Pair Corralation between Nextgen Healthcare and HealthEquity

If you would invest (100.00) in Nextgen Healthcare on December 31, 2024 and sell it today you would earn a total of  100.00  from holding Nextgen Healthcare or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nextgen Healthcare  vs.  HealthEquity

Nextgen Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextgen Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Nextgen Healthcare is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Nextgen Healthcare and HealthEquity

The main advantage of trading using opposite Nextgen Healthcare and HealthEquity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextgen Healthcare 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 Nextgen Healthcare 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..