Correlation Between HCA Healthcare and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare and Acadia 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 Acadia 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 Acadia Healthcare, you can compare the effects of market volatilities on HCA Healthcare and Acadia 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare and Acadia Healthcare.
Diversification Opportunities for HCA Healthcare and Acadia Healthcare
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between HCA and Acadia is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Acadia Healthcare go up and down completely randomly.
Pair Corralation between HCA Healthcare and Acadia Healthcare
Assuming the 90 days horizon HCA Healthcare is expected to generate 0.63 times more return on investment than Acadia Healthcare. However, HCA Healthcare is 1.6 times less risky than Acadia Healthcare. It trades about 0.04 of its potential returns per unit of risk. Acadia Healthcare is currently generating about -0.03 per unit of risk. If you would invest 23,311 in HCA Healthcare on October 27, 2024 and sell it today you would earn a total of 6,459 from holding HCA Healthcare or generate 27.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Healthcare vs. Acadia Healthcare
Performance |
| Timeline |
| HCA Healthcare |
| Acadia Healthcare |
HCA Healthcare and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare and Acadia Healthcare
The main advantage of trading using opposite HCA Healthcare and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare position performs unexpectedly, Acadia 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.| HCA Healthcare vs. United Breweries Co | HCA Healthcare vs. International Consolidated Airlines | HCA Healthcare vs. MOLSON RS BEVERAGE | HCA Healthcare vs. China Resources Beer |
| Acadia Healthcare vs. CHRYSALIS INVESTMENTS LTD | Acadia Healthcare vs. Chuangs China Investments | Acadia Healthcare vs. SLR Investment Corp | Acadia Healthcare vs. ECHO INVESTMENT ZY |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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