Correlation Between L3Harris Technologies and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies 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 L3Harris Technologies and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and HCA Healthcare, you can compare the effects of market volatilities on L3Harris Technologies 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 L3Harris Technologies with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and HCA Healthcare.
Diversification Opportunities for L3Harris Technologies and HCA Healthcare
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between L3Harris and HCA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies i.e., L3Harris Technologies and HCA Healthcare go up and down completely randomly.
Pair Corralation between L3Harris Technologies and HCA Healthcare
Assuming the 90 days trading horizon L3Harris Technologies is expected to under-perform the HCA Healthcare. In addition to that, L3Harris Technologies is 1.14 times more volatile than HCA Healthcare. It trades about -0.44 of its total potential returns per unit of risk. HCA Healthcare is currently generating about -0.44 per unit of volatility. If you would invest 33,504 in HCA Healthcare on September 20, 2024 and sell it today you would lose (3,313) from holding HCA Healthcare or give up 9.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
L3Harris Technologies vs. HCA Healthcare
Performance |
Timeline |
L3Harris Technologies |
HCA Healthcare |
L3Harris Technologies and HCA Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with L3Harris Technologies and HCA Healthcare
The main advantage of trading using opposite L3Harris Technologies and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies 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.L3Harris Technologies vs. Batm Advanced Communications | L3Harris Technologies vs. Applied Materials | L3Harris Technologies vs. Martin Marietta Materials | L3Harris Technologies vs. Gamma Communications PLC |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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