Correlation Between Progyny and American Well

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

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

Diversification Opportunities for Progyny and American Well

0.7

Correlation Coefficient

Progyny  American Well

Poor diversification

The 3 months correlation between Progyny and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Progyny and American Well Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Well Corp and Progyny 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 Progyny are associated (or correlated) with American Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Well Corp has no effect on the direction of Progyny i.e., Progyny and American Well go up and down completely randomly.

Pair Corralation between Progyny and American Well

Given the investment horizon of 90 days Progyny is expected to generate 0.45 times more return on investment than American Well. However, Progyny is 2.24 times less risky than American Well. It trades about 0.19 of its potential returns per unit of risk. American Well Corp is currently generating about 0.04 per unit of risk. If you would invest  1,693  in Progyny on December 30, 2024 and sell it today you would earn a total of  497.00  from holding Progyny or generate 29.36% return on investment over 90 days.

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

Progyny  vs.  American Well Corp

Progyny

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Progyny are ranked lower than 15 (%) 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.

American Well Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Well Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, American Well may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Progyny and American Well

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

The idea behind Progyny and American Well Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.