Correlation Between Ontrak and American Well

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

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

Diversification Opportunities for Ontrak and American Well

-0.05

Correlation Coefficient

Ontrak  American Well

Good diversification

The 3 months correlation between Ontrak and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ontrak Inc and American Well Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Well Corp and Ontrak 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 Ontrak Inc are associated (or correlated) with American Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Well Corp has no effect on the direction of Ontrak i.e., Ontrak and American Well go up and down completely randomly.

Pair Corralation between Ontrak and American Well

Given the investment horizon of 90 days Ontrak Inc is expected to under-perform the American Well. In addition to that, Ontrak is 2.3 times more volatile than American Well Corp. It trades about -0.06 of its total potential returns per unit of risk. American Well Corp is currently generating about 0.11 per unit of volatility. If you would invest  781.00  in American Well Corp on September 3, 2024 and sell it today you would earn a total of  176.00  from holding American Well Corp or generate 22.54% return on investment over 90 days.

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

Ontrak Inc  vs.  American Well Corp

Ontrak Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ontrak Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

American Well Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Well Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, American Well disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ontrak and American Well

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

The idea behind Ontrak Inc and American Well Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.