Correlation Between Signify Health and MedPeerInc

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

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

Diversification Opportunities for Signify Health and MedPeerInc

-0.61

Correlation Coefficient

Signify Health  MedPeerInc

Excellent diversification

The 3 months correlation between Signify and MedPeerInc is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Signify Health and MedPeerInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedPeerInc and Signify Health 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 Signify Health are associated (or correlated) with MedPeerInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedPeerInc has no effect on the direction of Signify Health i.e., Signify Health and MedPeerInc go up and down completely randomly.

Pair Corralation between Signify Health and MedPeerInc

If you would invest  3,049  in Signify Health on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Signify Health or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Signify Health  vs.  MedPeerInc

Signify Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signify Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Signify Health is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MedPeerInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MedPeerInc 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Signify Health and MedPeerInc

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

The idea behind Signify Health and MedPeerInc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.