Correlation Between HCA Healthcare and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Target Healthcare 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 Target Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare and Target Healthcare REIT, you can compare the effects of market volatilities on HCA Healthcare and Target Healthcare 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Target Healthcare.
Diversification Opportunities for HCA Healthcare and Target Healthcare
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HCA and Target is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Target Healthcare go up and down completely randomly.
Pair Corralation between HCA Healthcare and Target Healthcare
Assuming the 90 days trading horizon HCA Healthcare is expected to generate 5.13 times more return on investment than Target Healthcare. However, HCA Healthcare is 5.13 times more volatile than Target Healthcare REIT. It trades about 0.03 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.03 per unit of risk. If you would invest 24,450 in HCA Healthcare on December 1, 2024 and sell it today you would earn a total of 5,782 from holding HCA Healthcare or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
HCA Healthcare vs. Target Healthcare REIT
Performance |
| Timeline |
| HCA Healthcare |
| Target Healthcare REIT |
HCA Healthcare and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Target Healthcare
The main advantage of trading using opposite HCA Healthcare and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare's long position.| HCA Healthcare vs. International Consolidated Airlines | HCA Healthcare vs. Critical Metals Plc | HCA Healthcare vs. Dairy Farm International | HCA Healthcare vs. URU Metals |
| Target Healthcare vs. Supermarket Income REIT | Target Healthcare vs. Impax Environmental Markets | Target Healthcare vs. Molson Coors Beverage | Target Healthcare vs. JLEN Environmental Assets |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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