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
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HCA and Acadia is 0.81. 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 trading horizon HCA Healthcare is expected to under-perform the Acadia Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, HCA Healthcare is 2.57 times less risky than Acadia Healthcare. The stock trades about -0.01 of its potential returns per unit of risk. The Acadia Healthcare is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 3,680 in Acadia Healthcare on October 12, 2024 and sell it today you would earn a total of 760.00 from holding Acadia Healthcare or generate 20.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| 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. Air New Zealand | HCA Healthcare vs. Ryanair Holdings plc | HCA Healthcare vs. Nexstar Media Group | HCA Healthcare vs. Wizz Air Holdings |
| Acadia Healthcare vs. BC IRON | Acadia Healthcare vs. Monument Mining Limited | Acadia Healthcare vs. Dentsply Sirona | Acadia Healthcare vs. Nippon Steel |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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