Correlation Between Signify Health and Phreesia

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

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

Diversification Opportunities for Signify Health and Phreesia

0.56

Correlation Coefficient

Signify Health  Phreesia

Very weak diversification

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

Pair Corralation between Signify Health and Phreesia

If you would invest  2,033  in Phreesia on September 27, 2024 and sell it today you would earn a total of  486.00  from holding Phreesia or generate 23.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Signify Health  vs.  Phreesia

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.

Phreesia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phreesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Phreesia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Signify Health and Phreesia

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

The idea behind Signify Health and Phreesia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.