Correlation Between Definitive Healthcare and Castle Biosciences
Can any of the company-specific risk be diversified away by investing in both Definitive Healthcare and Castle Biosciences 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 Definitive Healthcare and Castle Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definitive Healthcare Corp and Castle Biosciences, you can compare the effects of market volatilities on Definitive Healthcare and Castle Biosciences 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 Definitive Healthcare with a short position of Castle Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definitive Healthcare and Castle Biosciences.
Diversification Opportunities for Definitive Healthcare and Castle Biosciences
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Definitive and Castle is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and Definitive Healthcare 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 Definitive Healthcare Corp are associated (or correlated) with Castle Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Biosciences has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Castle Biosciences go up and down completely randomly.
Pair Corralation between Definitive Healthcare and Castle Biosciences
Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the Castle Biosciences. In addition to that, Definitive Healthcare is 1.17 times more volatile than Castle Biosciences. It trades about -0.03 of its total potential returns per unit of risk. Castle Biosciences is currently generating about 0.03 per unit of volatility. If you would invest 1,683 in Castle Biosciences on April 8, 2025 and sell it today you would earn a total of 320.00 from holding Castle Biosciences or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definitive Healthcare Corp vs. Castle Biosciences
Performance |
| Timeline |
| Definitive Healthcare |
| Castle Biosciences |
Definitive Healthcare and Castle Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definitive Healthcare and Castle Biosciences
The main advantage of trading using opposite Definitive Healthcare and Castle Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare position performs unexpectedly, Castle Biosciences 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 Castle Biosciences will offset losses from the drop in Castle Biosciences' long position.| Definitive Healthcare vs. Nicola Mining | Definitive Healthcare vs. Vulcan Materials | Definitive Healthcare vs. US GoldMining Common | Definitive Healthcare vs. Kuya Silver |
| Castle Biosciences vs. HNI Corp | Castle Biosciences vs. Corsair Gaming | Castle Biosciences vs. Corporacion America Airports | Castle Biosciences vs. Highway Holdings Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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