Correlation Between Tabula Rasa and HealthStream

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

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

Diversification Opportunities for Tabula Rasa and HealthStream

0.88

Correlation Coefficient

Tabula Rasa  HealthStream

Very poor diversification

The 3 months correlation between Tabula and HealthStream is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tabula Rasa HealthCare and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream and Tabula Rasa 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 Tabula Rasa HealthCare 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 Tabula Rasa i.e., Tabula Rasa and HealthStream go up and down completely randomly.

Pair Corralation between Tabula Rasa and HealthStream

If you would invest  2,821  in HealthStream on September 12, 2024 and sell it today you would earn a total of  457.00  from holding HealthStream or generate 16.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Tabula Rasa HealthCare  vs.  HealthStream

Tabula Rasa HealthCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tabula Rasa HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Tabula Rasa is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Tabula Rasa and HealthStream

The main advantage of trading using opposite Tabula Rasa and HealthStream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tabula Rasa 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 Tabula Rasa HealthCare 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.