Correlation Between Definitive Healthcare and American Well
Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare and American Well 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 Definitive Healthcare and American Well into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definitive Healthcare Corp and American Well Corp, you can compare the effects of market volatilities on Definitive Healthcare and American Well 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 Definitive Healthcare with a short position of American Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and American Well.
Diversification Opportunities for Definitive Healthcare and American Well
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Definitive and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and American Well Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Well Corp and Definitive Healthcare 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 Definitive Healthcare Corp are associated (or correlated) with American Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Well Corp has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and American Well go up and down completely randomly.
Pair Corralation between Definitive Healthcare and American Well
Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the American Well. But the stock apears to be less risky and, when comparing its historical volatility, Definitive Healthcare Corp is 1.33 times less risky than American Well. The stock trades about -0.01 of its potential returns per unit of risk. The American Well Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 889.00 in American Well Corp on July 25, 2024 and sell it today you would earn a total of 122.00 from holding American Well Corp or generate 13.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Definitive Healthcare Corp vs. American Well Corp
Performance |
Timeline |
Definitive Healthcare |
American Well Corp |
Definitive Healthcare and American Well Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Definitive Healthcare and American Well
The main advantage of trading using opposite Definitive Healthcare and American Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare position performs unexpectedly, American Well 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 American Well will offset losses from the drop in American Well's long position.Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health Group |
American Well vs. Doximity | American Well vs. Certara | American Well vs. Teladoc | American Well vs. Definitive Healthcare 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |