Correlation Between P3 Health and Oncology Institute

Can any of the company-specific risk be diversified away by investing in both P3 Health and Oncology Institute 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 P3 Health and Oncology Institute into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P3 Health Partners and Oncology Institute, you can compare the effects of market volatilities on P3 Health and Oncology Institute 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 P3 Health with a short position of Oncology Institute. Check out your portfolio center. Please also check ongoing floating volatility patterns of P3 Health and Oncology Institute.

Diversification Opportunities for P3 Health and Oncology Institute

-0.39

Correlation Coefficient

P3 Health  Oncology Institute

Very good diversification

The 3 months correlation between PIII and Oncology is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding P3 Health Partners and Oncology Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncology Institute and P3 Health 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 P3 Health Partners are associated (or correlated) with Oncology Institute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncology Institute has no effect on the direction of P3 Health i.e., P3 Health and Oncology Institute go up and down completely randomly.

Pair Corralation between P3 Health and Oncology Institute

Given the investment horizon of 90 days P3 Health Partners is expected to under-perform the Oncology Institute. But the stock apears to be less risky and, when comparing its historical volatility, P3 Health Partners is 1.81 times less risky than Oncology Institute. The stock trades about -0.02 of its potential returns per unit of risk. The Oncology Institute is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Oncology Institute on December 28, 2024 and sell it today you would earn a total of  79.00  from holding Oncology Institute or generate 246.88% return on investment over 90 days.

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

P3 Health Partners  vs.  Oncology Institute

P3 Health Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days P3 Health Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Oncology Institute

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oncology Institute are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Oncology Institute demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with P3 Health and Oncology Institute

The main advantage of trading using opposite P3 Health and Oncology Institute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P3 Health position performs unexpectedly, Oncology Institute 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 Oncology Institute will offset losses from the drop in Oncology Institute's long position.

The idea behind P3 Health Partners and Oncology Institute 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.