Correlation Between Definitive Healthcare and NetApp

Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare and NetApp 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 NetApp 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 NetApp Inc, you can compare the effects of market volatilities on Definitive Healthcare and NetApp 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 NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and NetApp.

Diversification Opportunities for Definitive Healthcare and NetApp

0.93

Correlation Coefficient

Definitive Healthcare  NetApp

Almost no diversification

The 3 months correlation between Definitive and NetApp is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and NetApp go up and down completely randomly.

Pair Corralation between Definitive Healthcare and NetApp

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 3.03 times more return on investment than NetApp. However, Definitive Healthcare is 3.03 times more volatile than NetApp Inc. It trades about 0.16 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.3 per unit of risk. If you would invest  251.00  in Definitive Healthcare Corp on April 21, 2025 and sell it today you would earn a total of  133.00  from holding Definitive Healthcare Corp or generate 52.99% return on investment over 90 days.

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

Definitive Healthcare Corp  vs.  NetApp Inc

Definitive Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Definitive Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NetApp Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Definitive Healthcare and NetApp

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

The idea behind Definitive Healthcare Corp and NetApp Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.