Correlation Between HealthStream and Omnicell

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

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

Diversification Opportunities for HealthStream and Omnicell

0.56

Correlation Coefficient

HealthStream  Omnicell

Very weak diversification

The 3 months correlation between HealthStream and Omnicell is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding HealthStream and Omnicell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicell and HealthStream 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 HealthStream are associated (or correlated) with Omnicell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnicell has no effect on the direction of HealthStream i.e., HealthStream and Omnicell go up and down completely randomly.

Pair Corralation between HealthStream and Omnicell

Given the investment horizon of 90 days HealthStream is expected to generate 0.49 times more return on investment than Omnicell. However, HealthStream is 2.02 times less risky than Omnicell. It trades about 0.33 of its potential returns per unit of risk. Omnicell is currently generating about -0.03 per unit of risk. If you would invest  2,917  in HealthStream on September 5, 2024 and sell it today you would earn a total of  378.00  from holding HealthStream or generate 12.96% return on investment over 90 days.

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

HealthStream  vs.  Omnicell

HealthStream

Risk-Adjusted Performance

10 of 100

OK

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

Omnicell

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omnicell are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Omnicell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HealthStream and Omnicell

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

The idea behind HealthStream and Omnicell 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.