Correlation Between Bright Health and RH

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

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

Diversification Opportunities for Bright Health and RH

-0.2

Correlation Coefficient

Bright Health  RH

Good diversification

The 3 months correlation between Bright and RH is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bright Health Group and RH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RH and Bright 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 Bright Health Group are associated (or correlated) with RH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RH has no effect on the direction of Bright Health i.e., Bright Health and RH go up and down completely randomly.

Pair Corralation between Bright Health and RH

If you would invest  1,635  in Bright Health Group on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Bright Health Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Bright Health Group  vs.  RH

Bright Health Group

Risk-Adjusted Performance

0 of 100

Market Crasher

Over the last 90 days Bright Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady technical indicators, Bright Health reported solid returns over the last few months and may actually be approaching a breakup point.

RH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, RH is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bright Health and RH

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

The idea behind Bright Health Group and RH 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.