Correlation Between EHealth and Arthur J
Can any of the company-specific risk be diversified away by investing in both EHealth and Arthur J 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 EHealth and Arthur J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eHealth and Arthur J Gallagher, you can compare the effects of market volatilities on EHealth and Arthur J 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 EHealth with a short position of Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHealth and Arthur J.
Diversification Opportunities for EHealth and Arthur J
Good diversification
The 3 months correlation between EHealth and Arthur is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding eHealth and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and EHealth 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 eHealth are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of EHealth i.e., EHealth and Arthur J go up and down completely randomly.
Pair Corralation between EHealth and Arthur J
Given the investment horizon of 90 days eHealth is expected to under-perform the Arthur J. In addition to that, EHealth is 3.98 times more volatile than Arthur J Gallagher. It trades about -0.28 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about -0.38 per unit of volatility. If you would invest 25,587 in Arthur J Gallagher on January 20, 2024 and sell it today you would lose (2,188) from holding Arthur J Gallagher or give up 8.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
eHealth vs. Arthur J Gallagher
Performance |
| Timeline |
| eHealth |
| Arthur J Gallagher |
EHealth and Arthur J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHealth and Arthur J
The main advantage of trading using opposite EHealth and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHealth position performs unexpectedly, Arthur J 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 Arthur J will offset losses from the drop in Arthur J's long position.| EHealth vs. Erie Indemnity | EHealth vs. Crawford Company | EHealth vs. Crawford Company | EHealth vs. CorVel Corp |
| Arthur J vs. Erie Indemnity | Arthur J vs. Crawford Company | Arthur J vs. Crawford Company | Arthur J vs. CorVel Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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