Correlation Between Health Catalyst and HealthStream

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

By analyzing existing cross correlation between Health Catalyst and HealthStream, you can compare the effects of market volatilities on Health Catalyst and HealthStream 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 Health Catalyst with a short position of HealthStream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Catalyst and HealthStream.

Diversification Opportunities for Health Catalyst and HealthStream

0.27

Correlation Coefficient

Health Catalyst  HealthStream

Modest diversification

The 3 months correlation between Health and HealthStream is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Health Catalyst and HealthStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthStream and Health Catalyst 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 Health Catalyst are associated (or correlated) with HealthStream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthStream has no effect on the direction of Health Catalyst i.e., Health Catalyst and HealthStream go up and down completely randomly.

Pair Corralation between Health Catalyst and HealthStream

Given the investment horizon of 90 days Health Catalyst is expected to generate 1.17 times more return on investment than HealthStream. However, Health Catalyst is 1.17 times more volatile than HealthStream. It trades about 0.01 of its potential returns per unit of risk. HealthStream is currently generating about -0.12 per unit of risk. If you would invest  399.00  in Health Catalyst on May 1, 2025 and sell it today you would lose (7.00) from holding Health Catalyst or give up 1.75% of portfolio value over 90 days.

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

Health Catalyst  vs.  HealthStream

Health Catalyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Health Catalyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Health Catalyst is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

HealthStream

Risk-Adjusted Performance

Very Weak

Over the last 90 days HealthStream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Health Catalyst and HealthStream

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

The idea behind Health Catalyst and HealthStream 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.