Correlation Between Progyny and HealthStream

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

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

Diversification Opportunities for Progyny and HealthStream

-0.43

Correlation Coefficient

Progyny  HealthStream

Very good diversification

The 3 months correlation between Progyny and HealthStream is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Progyny and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream 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 HealthStream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthStream has no effect on the direction of Progyny i.e., Progyny and HealthStream go up and down completely randomly.

Pair Corralation between Progyny and HealthStream

Given the investment horizon of 90 days Progyny is expected to under-perform the HealthStream. In addition to that, Progyny is 2.07 times more volatile than HealthStream. It trades about -0.03 of its total potential returns per unit of risk. HealthStream is currently generating about 0.04 per unit of volatility. If you would invest  2,497  in HealthStream on September 4, 2024 and sell it today you would earn a total of  819.00  from holding HealthStream or generate 32.8% return on investment over 90 days.

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

Progyny  vs.  HealthStream

Progyny

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progyny has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly 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.

HealthStream

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Progyny and HealthStream

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

The idea behind Progyny and HealthStream 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.