Correlation Between Loews Corp and EHealth

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

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

Diversification Opportunities for Loews Corp and EHealth

-0.37

Correlation Coefficient

Loews Corp  EHealth

Very good diversification

The 3 months correlation between Loews and EHealth is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and eHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eHealth and Loews Corp 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 Loews Corp are associated (or correlated) with EHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eHealth has no effect on the direction of Loews Corp i.e., Loews Corp and EHealth go up and down completely randomly.

Pair Corralation between Loews Corp and EHealth

Taking into account the 90-day investment horizon Loews Corp is expected to generate 0.46 times more return on investment than EHealth. However, Loews Corp is 2.16 times less risky than EHealth. It trades about 0.0 of its potential returns per unit of risk. eHealth is currently generating about -0.2 per unit of risk. If you would invest  8,623  in Loews Corp on January 18, 2025 and sell it today you would lose (91.00) from holding Loews Corp or give up 1.06% of portfolio value over 90 days.

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

Loews Corp  vs.  eHealth

Loews Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loews Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

eHealth

Risk-Adjusted Performance

Very Weak

Over the last 90 days eHealth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Loews Corp and EHealth

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

The idea behind Loews Corp and eHealth 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.