Correlation Between HCA Healthcare and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Ebro Foods 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 Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Ebro Foods, you can compare the effects of market volatilities on HCA Healthcare and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Ebro Foods.
Diversification Opportunities for HCA Healthcare and Ebro Foods
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between HCA and Ebro is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Ebro Foods go up and down completely randomly.
Pair Corralation between HCA Healthcare and Ebro Foods
Assuming the 90 days trading horizon HCA Healthcare is expected to under-perform the Ebro Foods. In addition to that, HCA Healthcare is 1.83 times more volatile than Ebro Foods. It trades about -0.36 of its total potential returns per unit of risk. Ebro Foods is currently generating about -0.02 per unit of volatility. If you would invest 1,593 in Ebro Foods on September 28, 2024 and sell it today you would lose (5.00) from holding Ebro Foods or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Healthcare vs. Ebro Foods
Performance |
| Timeline |
| HCA Healthcare |
| Ebro Foods |
HCA Healthcare and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Ebro Foods
The main advantage of trading using opposite HCA Healthcare and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| HCA Healthcare vs. Uniper SE | HCA Healthcare vs. Mulberry Group PLC | HCA Healthcare vs. London Security Plc | HCA Healthcare vs. Triad Group PLC |
| Ebro Foods vs. Uniper SE | Ebro Foods vs. Mulberry Group PLC | Ebro Foods vs. London Security Plc | Ebro Foods vs. Triad Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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