Correlation Between HCA Healthcare and SMA Solar
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and SMA Solar Technology, you can compare the effects of market volatilities on HCA Healthcare and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and SMA Solar.
Diversification Opportunities for HCA Healthcare and SMA Solar
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HCA and SMA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and SMA Solar go up and down completely randomly.
Pair Corralation between HCA Healthcare and SMA Solar
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 2.27 times more return on investment than SMA Solar. However, HCA Healthcare is 2.27 times more volatile than SMA Solar Technology. It trades about 0.03 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.07 per unit of risk. If you would invest 24,609 in HCA Healthcare on October 17, 2024 and sell it today you would earn a total of 5,504 from holding HCA Healthcare or generate 22.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
HCA Healthcare vs. SMA Solar Technology
Performance |
| Timeline |
| HCA Healthcare |
| SMA Solar Technology |
HCA Healthcare and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and SMA Solar
The main advantage of trading using opposite HCA Healthcare and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| HCA Healthcare vs. Hochschild Mining plc | HCA Healthcare vs. Zegona Communications Plc | HCA Healthcare vs. Europa Metals | HCA Healthcare vs. Coor Service Management |
| SMA Solar vs. Inspiration Healthcare Group | SMA Solar vs. Wheaton Precious Metals | SMA Solar vs. HCA Healthcare | SMA Solar vs. Travel Leisure Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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