Correlation Between HCA Healthcare and L3Harris Technologies
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and L3Harris Technologies 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 L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and L3Harris Technologies, you can compare the effects of market volatilities on HCA Healthcare and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and L3Harris Technologies.
Diversification Opportunities for HCA Healthcare and L3Harris Technologies
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between HCA and L3Harris is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and L3Harris Technologies go up and down completely randomly.
Pair Corralation between HCA Healthcare and L3Harris Technologies
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 5.62 times more return on investment than L3Harris Technologies. However, HCA Healthcare is 5.62 times more volatile than L3Harris Technologies. It trades about 0.03 of its potential returns per unit of risk. L3Harris Technologies is currently generating about 0.02 per unit of risk. If you would invest 23,770 in HCA Healthcare on September 20, 2024 and sell it today you would earn a total of 6,421 from holding HCA Healthcare or generate 27.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
HCA Healthcare vs. L3Harris Technologies
Performance |
| Timeline |
| HCA Healthcare |
| L3Harris Technologies |
HCA Healthcare and L3Harris Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and L3Harris Technologies
The main advantage of trading using opposite HCA Healthcare and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.| HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Hyundai Motor | HCA Healthcare vs. Reliance Industries Ltd |
| L3Harris Technologies vs. Batm Advanced Communications | L3Harris Technologies vs. Applied Materials | L3Harris Technologies vs. Martin Marietta Materials | L3Harris Technologies vs. Gamma Communications PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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