Correlation Between American Well and GE HealthCare

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

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

Diversification Opportunities for American Well and GE HealthCare

0.83

Correlation Coefficient

American Well  GE HealthCare

Very poor diversification

The 3 months correlation between American and GEHC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Well Corp and GE HealthCare Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE HealthCare Techno and American Well 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 American Well Corp are associated (or correlated) with GE HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE HealthCare Techno has no effect on the direction of American Well i.e., American Well and GE HealthCare go up and down completely randomly.

Pair Corralation between American Well and GE HealthCare

Given the investment horizon of 90 days American Well Corp is expected to generate 2.01 times more return on investment than GE HealthCare. However, American Well is 2.01 times more volatile than GE HealthCare Technologies. It trades about 0.03 of its potential returns per unit of risk. GE HealthCare Technologies is currently generating about 0.03 per unit of risk. If you would invest  678.00  in American Well Corp on May 7, 2025 and sell it today you would earn a total of  26.00  from holding American Well Corp or generate 3.83% return on investment over 90 days.

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

American Well Corp  vs.  GE HealthCare Technologies

American Well Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Well Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, American Well may actually be approaching a critical reversion point that can send shares even higher in September 2025.

GE HealthCare Techno

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE HealthCare Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, GE HealthCare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Well and GE HealthCare

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

The idea behind American Well Corp and GE HealthCare Technologies 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..