Correlation Between HCA Healthcare, and Align Technology
Can any of the company-specific risk be diversified away by investing in both HCA Healthcare, and Align Technology 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 Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Healthcare, and Align Technology, you can compare the effects of market volatilities on HCA Healthcare, and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Healthcare, and Align Technology.
Diversification Opportunities for HCA Healthcare, and Align Technology
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HCA and Align is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare, and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of HCA Healthcare, i.e., HCA Healthcare, and Align Technology go up and down completely randomly.
Pair Corralation between HCA Healthcare, and Align Technology
Assuming the 90 days trading horizon HCA Healthcare, is expected to generate 0.71 times more return on investment than Align Technology. However, HCA Healthcare, is 1.4 times less risky than Align Technology. It trades about 0.05 of its potential returns per unit of risk. Align Technology is currently generating about -0.23 per unit of risk. If you would invest 9,387 in HCA Healthcare, on October 12, 2024 and sell it today you would earn a total of 103.00 from holding HCA Healthcare, or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Healthcare, vs. Align Technology
Performance |
| Timeline |
| HCA Healthcare, |
| Align Technology |
HCA Healthcare, and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Healthcare, and Align Technology
The main advantage of trading using opposite HCA Healthcare, and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Healthcare, position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| HCA Healthcare, vs. Bread Financial Holdings | HCA Healthcare, vs. Citizens Financial Group, | HCA Healthcare, vs. Zoom Video Communications | HCA Healthcare, vs. Mitsubishi UFJ Financial |
| Align Technology vs. Melco Resorts Entertainment | Align Technology vs. United Natural Foods, | Align Technology vs. Beyond Meat | Align Technology vs. Verizon Communications |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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