Correlation Between WELL Health and ISign Media

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

By analyzing existing cross correlation between WELL Health Technologies and iSign Media Solutions, you can compare the effects of market volatilities on WELL Health and ISign Media 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 WELL Health with a short position of ISign Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of WELL Health and ISign Media.

Diversification Opportunities for WELL Health and ISign Media

-0.14

Correlation Coefficient

WELL Health  ISign Media

Good diversification

The 3 months correlation between WELL and ISign is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding WELL Health Technologies and iSign Media Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Media Solutions and WELL 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 WELL Health Technologies are associated (or correlated) with ISign Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Media Solutions has no effect on the direction of WELL Health i.e., WELL Health and ISign Media go up and down completely randomly.

Pair Corralation between WELL Health and ISign Media

Assuming the 90 days trading horizon WELL Health is expected to generate 13.85 times less return on investment than ISign Media. But when comparing it to its historical volatility, WELL Health Technologies is 22.77 times less risky than ISign Media. It trades about 0.11 of its potential returns per unit of risk. iSign Media Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.00  in iSign Media Solutions on October 9, 2024 and sell it today you would earn a total of  1,376  from holding iSign Media Solutions or generate 137600.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

WELL Health Technologies  vs.  iSign Media Solutions

WELL Health Technologies

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WELL Health Technologies are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WELL Health displayed solid returns over the last few months and may actually be approaching a breakup point.

iSign Media Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Media Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ISign Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WELL Health and ISign Media

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

The idea behind WELL Health Technologies and iSign Media Solutions 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.