Correlation Between Pinnacle West and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Pinnacle West and HCA 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 Pinnacle West and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinnacle West Capital and HCA Healthcare, you can compare the effects of market volatilities on Pinnacle West and HCA 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 Pinnacle West with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle West and HCA Healthcare.
Diversification Opportunities for Pinnacle West and HCA Healthcare
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pinnacle and HCA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle West Capital and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Pinnacle West 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 Pinnacle West Capital are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Pinnacle West i.e., Pinnacle West and HCA Healthcare go up and down completely randomly.
Pair Corralation between Pinnacle West and HCA Healthcare
Assuming the 90 days trading horizon Pinnacle West Capital is expected to generate 1.14 times more return on investment than HCA Healthcare. However, Pinnacle West is 1.14 times more volatile than HCA Healthcare. It trades about 0.26 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.31 per unit of risk. If you would invest 8,643 in Pinnacle West Capital on August 31, 2024 and sell it today you would earn a total of 854.00 from holding Pinnacle West Capital or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinnacle West Capital vs. HCA Healthcare
Performance |
| Timeline |
| Pinnacle West Capital |
| HCA Healthcare |
Pinnacle West and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinnacle West and HCA Healthcare
The main advantage of trading using opposite Pinnacle West and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle West position performs unexpectedly, HCA 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Pinnacle West vs. Neometals | Pinnacle West vs. Coor Service Management | Pinnacle West vs. Aeorema Communications Plc | Pinnacle West vs. JLEN Environmental Assets |
| HCA Healthcare vs. Neometals | HCA Healthcare vs. Coor Service Management | HCA Healthcare vs. Aeorema Communications Plc | HCA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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