Correlation Between Definitive Healthcare and Service Properties

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

Diversification Opportunities for Definitive Healthcare and Service Properties

0.88

Correlation Coefficient

Definitive Healthcare  Service Properties

Very poor diversification

The 3 months correlation between Definitive and Service is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Service Properties go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Service Properties

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to generate 1.51 times more return on investment than Service Properties. However, Definitive Healthcare is 1.51 times more volatile than Service Properties Trust. It trades about 0.13 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.13 per unit of risk. If you would invest  265.00  in Definitive Healthcare Corp on May 6, 2025 and sell it today you would earn a total of  109.00  from holding Definitive Healthcare Corp or generate 41.13% return on investment over 90 days.

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

Definitive Healthcare Corp  vs.  Service Properties Trust

Definitive Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Definitive Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Service Properties Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Service Properties Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Service Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Definitive Healthcare and Service Properties

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

The idea behind Definitive Healthcare Corp and Service Properties Trust 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.