Correlation Between HCA Healthcare and Capital Drilling
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Capital Drilling 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 Capital Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Capital Drilling, you can compare the effects of market volatilities on HCA Healthcare and Capital Drilling 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Capital Drilling.
Diversification Opportunities for HCA Healthcare and Capital Drilling
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HCA and Capital is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Capital Drilling go up and down completely randomly.
Pair Corralation between HCA Healthcare and Capital Drilling
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 3.98 times more return on investment than Capital Drilling. However, HCA Healthcare is 3.98 times more volatile than Capital Drilling. It trades about 0.03 of its potential returns per unit of risk. Capital Drilling is currently generating about -0.01 per unit of risk. If you would invest 25,339 in HCA Healthcare on October 25, 2024 and sell it today you would earn a total of 6,853 from holding HCA Healthcare or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
HCA Healthcare vs. Capital Drilling
Performance |
| Timeline |
| HCA Healthcare |
| Capital Drilling |
HCA Healthcare and Capital Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Capital Drilling
The main advantage of trading using opposite HCA Healthcare and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Capital Drilling 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.| HCA Healthcare vs. Seche Environnement SA | HCA Healthcare vs. Impax Environmental Markets | HCA Healthcare vs. Spotify Technology SA | HCA Healthcare vs. Oxford Technology 2 |
| Capital Drilling vs. Pets at Home | Capital Drilling vs. Cairn Homes PLC | Capital Drilling vs. International Biotechnology Trust | Capital Drilling vs. Gruppo MutuiOnline SpA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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