Correlation Between HealthEquity and Omnicell

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

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

Diversification Opportunities for HealthEquity and Omnicell

-0.68

Correlation Coefficient

HealthEquity  Omnicell

Excellent diversification

The 3 months correlation between HealthEquity and Omnicell is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and Omnicell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnicell and HealthEquity 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 HealthEquity 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 HealthEquity i.e., HealthEquity and Omnicell go up and down completely randomly.

Pair Corralation between HealthEquity and Omnicell

Considering the 90-day investment horizon HealthEquity is expected to under-perform the Omnicell. But the stock apears to be less risky and, when comparing its historical volatility, HealthEquity is 2.13 times less risky than Omnicell. The stock trades about -0.06 of its potential returns per unit of risk. The Omnicell is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,757  in Omnicell on February 3, 2024 and sell it today you would earn a total of  256.00  from holding Omnicell or generate 9.29% return on investment over 90 days.

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

HealthEquity  vs.  Omnicell

HealthEquity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HealthEquity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, HealthEquity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Omnicell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omnicell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Omnicell is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HealthEquity and Omnicell

The main advantage of trading using opposite HealthEquity and Omnicell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HealthEquity 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 HealthEquity 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.