Correlation Between Numinus Wellness and P3 Health

Can any of the company-specific risk be diversified away by investing in both Numinus Wellness and P3 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 Numinus Wellness and P3 Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Numinus Wellness and P3 Health Partners, you can compare the effects of market volatilities on Numinus Wellness and P3 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 Numinus Wellness with a short position of P3 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Numinus Wellness and P3 Health.

Diversification Opportunities for Numinus Wellness and P3 Health

-0.56

Correlation Coefficient

Numinus Wellness  P3 Health

Excellent diversification

The 3 months correlation between Numinus and PIII is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Numinus Wellness and P3 Health Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P3 Health Partners and Numinus Wellness 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 Numinus Wellness are associated (or correlated) with P3 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P3 Health Partners has no effect on the direction of Numinus Wellness i.e., Numinus Wellness and P3 Health go up and down completely randomly.

Pair Corralation between Numinus Wellness and P3 Health

Assuming the 90 days horizon Numinus Wellness is expected to generate 1.28 times more return on investment than P3 Health. However, Numinus Wellness is 1.28 times more volatile than P3 Health Partners. It trades about -0.01 of its potential returns per unit of risk. P3 Health Partners is currently generating about -0.02 per unit of risk. If you would invest  3.20  in Numinus Wellness on September 23, 2024 and sell it today you would lose (0.20) from holding Numinus Wellness or give up 6.25% of portfolio value over 90 days.

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

Numinus Wellness  vs.  P3 Health Partners

Numinus Wellness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Numinus Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

P3 Health Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days P3 Health Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Numinus Wellness and P3 Health

The main advantage of trading using opposite Numinus Wellness and P3 Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Numinus Wellness position performs unexpectedly, P3 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 P3 Health will offset losses from the drop in P3 Health's long position.

The idea behind Numinus Wellness and P3 Health Partners 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.