Correlation Between Progyny and HealthEquity

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

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

Diversification Opportunities for Progyny and HealthEquity

-0.45

Correlation Coefficient

Progyny  HealthEquity

Very good diversification

The 3 months correlation between Progyny and HealthEquity is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Progyny and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity and Progyny 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 Progyny are associated (or correlated) with HealthEquity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthEquity has no effect on the direction of Progyny i.e., Progyny and HealthEquity go up and down completely randomly.

Pair Corralation between Progyny and HealthEquity

Given the investment horizon of 90 days Progyny is expected to under-perform the HealthEquity. In addition to that, Progyny is 2.3 times more volatile than HealthEquity. It trades about -0.14 of its total potential returns per unit of risk. HealthEquity is currently generating about 0.08 per unit of volatility. If you would invest  7,976  in HealthEquity on July 25, 2024 and sell it today you would earn a total of  785.00  from holding HealthEquity or generate 9.84% return on investment over 90 days.

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

Progyny  vs.  HealthEquity

Progyny

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progyny has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

HealthEquity

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, HealthEquity may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Progyny and HealthEquity

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

The idea behind Progyny and HealthEquity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.