Correlation Between HCA Healthcare and Avon Protection
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Avon Protection 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 Avon Protection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Avon Protection PLC, you can compare the effects of market volatilities on HCA Healthcare and Avon Protection 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 Avon Protection. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Avon Protection.
Diversification Opportunities for HCA Healthcare and Avon Protection
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HCA and Avon is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Avon Protection PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avon Protection PLC 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 Avon Protection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avon Protection PLC has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Avon Protection go up and down completely randomly.
Pair Corralation between HCA Healthcare and Avon Protection
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 2.98 times less return on investment than Avon Protection. But when comparing it to its historical volatility, HCA Healthcare is 1.08 times less risky than Avon Protection. It trades about 0.05 of its potential returns per unit of risk. Avon Protection PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 81,495 in Avon Protection PLC on September 14, 2024 and sell it today you would earn a total of 56,505 from holding Avon Protection PLC or generate 69.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
HCA Healthcare vs. Avon Protection PLC
Performance |
| Timeline |
| HCA Healthcare |
| Avon Protection PLC |
HCA Healthcare and Avon Protection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Avon Protection
The main advantage of trading using opposite HCA Healthcare and Avon Protection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Avon Protection 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 Avon Protection will offset losses from the drop in Avon Protection's long position.| HCA Healthcare vs. Metals Exploration Plc | HCA Healthcare vs. Teradata Corp | HCA Healthcare vs. Hochschild Mining plc | HCA Healthcare vs. Southern Copper Corp |
| Avon Protection vs. Polar Capital Technology | Avon Protection vs. CVS Health Corp | Avon Protection vs. Spotify Technology SA | Avon Protection vs. MyHealthChecked 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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