Correlation Between Healthcare Triangle and Privia Health

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

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

Diversification Opportunities for Healthcare Triangle and Privia Health

0.63

Correlation Coefficient

Healthcare Triangle  Privia Health

Poor diversification

The 3 months correlation between Healthcare and Privia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and Privia Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Privia Health Group and Healthcare Triangle 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 Healthcare Triangle are associated (or correlated) with Privia Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Privia Health Group has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and Privia Health go up and down completely randomly.

Pair Corralation between Healthcare Triangle and Privia Health

Given the investment horizon of 90 days Healthcare Triangle is expected to generate 6.94 times more return on investment than Privia Health. However, Healthcare Triangle is 6.94 times more volatile than Privia Health Group. It trades about 0.06 of its potential returns per unit of risk. Privia Health Group is currently generating about 0.08 per unit of risk. If you would invest  73.00  in Healthcare Triangle on September 2, 2024 and sell it today you would lose (4.00) from holding Healthcare Triangle or give up 5.48% of portfolio value over 90 days.

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

Healthcare Triangle  vs.  Privia Health Group

Healthcare Triangle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Triangle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Healthcare Triangle demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Privia Health Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and Privia Health

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

The idea behind Healthcare Triangle and Privia Health Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.