Correlation Between Spirent Communications and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and HCA Healthcare, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and HCA Healthcare.
Diversification Opportunities for Spirent Communications and HCA Healthcare
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spirent and HCA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and HCA Healthcare go up and down completely randomly.
Pair Corralation between Spirent Communications and HCA Healthcare
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Spirent Communications plc is 1.36 times less risky than HCA Healthcare. The stock trades about -0.02 of its potential returns per unit of risk. The HCA Healthcare is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 30,508 in HCA Healthcare on September 2, 2024 and sell it today you would earn a total of 392.00 from holding HCA Healthcare or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. HCA Healthcare
Performance |
| Timeline |
| Spirent Communications |
| HCA Healthcare |
Spirent Communications and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and HCA Healthcare
The main advantage of trading using opposite Spirent Communications and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Deutsche Telekom AG | Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. NMI Holdings | Spirent Communications vs. Origin Agritech |
| HCA Healthcare vs. Chunghwa Telecom Co | HCA Healthcare vs. METHODE ELECTRONICS | HCA Healthcare vs. Spirent Communications plc | HCA Healthcare vs. KIMBALL ELECTRONICS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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