Correlation Between HCA Healthcare and Emergent Biosolutions
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Emergent Biosolutions 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 HCA Healthcare and Emergent Biosolutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Emergent Biosolutions, you can compare the effects of market volatilities on HCA Healthcare and Emergent Biosolutions 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 HCA Healthcare with a short position of Emergent Biosolutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Emergent Biosolutions.
Diversification Opportunities for HCA Healthcare and Emergent Biosolutions
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HCA and Emergent is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and HCA 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 HCA Healthcare are associated (or correlated) with Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Emergent Biosolutions go up and down completely randomly.
Pair Corralation between HCA Healthcare and Emergent Biosolutions
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 1.02 times less return on investment than Emergent Biosolutions. But when comparing it to its historical volatility, HCA Healthcare is 1.06 times less risky than Emergent Biosolutions. It trades about 0.03 of its potential returns per unit of risk. Emergent Biosolutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Emergent Biosolutions on September 13, 2024 and sell it today you would lose (251.00) from holding Emergent Biosolutions or give up 22.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.07% |
| Values | Daily Returns |
HCA Healthcare vs. Emergent Biosolutions
Performance |
| Timeline |
| HCA Healthcare |
| Emergent Biosolutions |
HCA Healthcare and Emergent Biosolutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Emergent Biosolutions
The main advantage of trading using opposite HCA Healthcare and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Emergent Biosolutions 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 Emergent Biosolutions will offset losses from the drop in Emergent Biosolutions' long position.| HCA Healthcare vs. International Consolidated Airlines | HCA Healthcare vs. United Airlines Holdings | HCA Healthcare vs. Monster Beverage Corp | HCA Healthcare vs. Teradata Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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