Correlation Between Electromed and HCA Holdings
Can any of the company-specific risk be diversified away by investing in both Electromed and HCA Holdings 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 Electromed and HCA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and HCA Holdings, you can compare the effects of market volatilities on Electromed and HCA Holdings 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 Electromed with a short position of HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and HCA Holdings.
Diversification Opportunities for Electromed and HCA Holdings
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electromed and HCA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings and Electromed 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 Electromed are associated (or correlated) with HCA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Holdings has no effect on the direction of Electromed i.e., Electromed and HCA Holdings go up and down completely randomly.
Pair Corralation between Electromed and HCA Holdings
Given the investment horizon of 90 days Electromed is expected to generate 2.19 times more return on investment than HCA Holdings. However, Electromed is 2.19 times more volatile than HCA Holdings. It trades about 0.14 of its potential returns per unit of risk. HCA Holdings is currently generating about 0.08 per unit of risk. If you would invest 1,028 in Electromed on August 26, 2024 and sell it today you would earn a total of 1,951 from holding Electromed or generate 189.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. HCA Holdings
Performance |
| Timeline |
| Electromed |
| HCA Holdings |
Electromed and HCA Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and HCA Holdings
The main advantage of trading using opposite Electromed and HCA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, HCA Holdings 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 Holdings will offset losses from the drop in HCA Holdings' long position.| Electromed vs. Neuropace | Electromed vs. Orthopediatrics Corp | Electromed vs. SurModics | Electromed vs. Paragon 28 |
| HCA Holdings vs. Acadia Healthcare | HCA Holdings vs. Tenet Healthcare | HCA Holdings vs. US Physicalrapy | HCA Holdings vs. DaVita HealthCare Partners |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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