Correlation Between Fresenius Medical and HCA Holdings
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical 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 Fresenius Medical and HCA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and HCA Holdings, you can compare the effects of market volatilities on Fresenius Medical 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 Fresenius Medical with a short position of HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and HCA Holdings.
Diversification Opportunities for Fresenius Medical and HCA Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fresenius and HCA is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings and Fresenius Medical 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 Fresenius Medical Care 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 Fresenius Medical i.e., Fresenius Medical and HCA Holdings go up and down completely randomly.
Pair Corralation between Fresenius Medical and HCA Holdings
Considering the 90-day investment horizon Fresenius Medical Care is expected to under-perform the HCA Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Fresenius Medical Care is 2.02 times less risky than HCA Holdings. The stock trades about -0.2 of its potential returns per unit of risk. The HCA Holdings is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 33,200 in HCA Holdings on November 28, 2024 and sell it today you would lose (1,377) from holding HCA Holdings or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. HCA Holdings
Performance |
| Timeline |
| Fresenius Medical Care |
| HCA Holdings |
Fresenius Medical and HCA Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and HCA Holdings
The main advantage of trading using opposite Fresenius Medical and HCA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical 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.| Fresenius Medical vs. Universal Health Services | Fresenius Medical vs. Addus HomeCare | Fresenius Medical vs. HCA Holdings | Fresenius Medical vs. Tenet Healthcare |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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