Correlation Between HealthEquity and Progyny

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

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

Diversification Opportunities for HealthEquity and Progyny

0.69

Correlation Coefficient

HealthEquity  Progyny

Poor diversification

The 3 months correlation between HealthEquity and Progyny is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and Progyny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progyny and HealthEquity 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 HealthEquity are associated (or correlated) with Progyny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progyny has no effect on the direction of HealthEquity i.e., HealthEquity and Progyny go up and down completely randomly.

Pair Corralation between HealthEquity and Progyny

Considering the 90-day investment horizon HealthEquity is expected to generate 0.35 times more return on investment than Progyny. However, HealthEquity is 2.85 times less risky than Progyny. It trades about -0.04 of its potential returns per unit of risk. Progyny is currently generating about -0.22 per unit of risk. If you would invest  8,030  in HealthEquity on February 28, 2024 and sell it today you would lose (103.00) from holding HealthEquity or give up 1.28% of portfolio value over 90 days.

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

HealthEquity  vs.  Progyny

HealthEquity

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HealthEquity and Progyny

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

The idea behind HealthEquity and Progyny 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.