Correlation Between HCA Holdings and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both HCA Holdings 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 Holdings 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 Holdings and Acadia Healthcare, you can compare the effects of market volatilities on HCA Holdings 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 Holdings with a short position of Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Holdings and Acadia Healthcare.
Diversification Opportunities for HCA Holdings and Acadia Healthcare
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HCA and Acadia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare and HCA Holdings 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 Holdings 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 Holdings i.e., HCA Holdings and Acadia Healthcare go up and down completely randomly.
Pair Corralation between HCA Holdings and Acadia Healthcare
Considering the 90-day investment horizon HCA Holdings is expected to generate 1.14 times less return on investment than Acadia Healthcare. But when comparing it to its historical volatility, HCA Holdings is 1.24 times less risky than Acadia Healthcare. It trades about 0.22 of its potential returns per unit of risk. Acadia Healthcare is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,965 in Acadia Healthcare on November 1, 2024 and sell it today you would earn a total of 409.00 from holding Acadia Healthcare or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Holdings vs. Acadia Healthcare
Performance |
| Timeline |
| HCA Holdings |
| Acadia Healthcare |
HCA Holdings and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Holdings and Acadia Healthcare
The main advantage of trading using opposite HCA Holdings and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Holdings 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 Holdings vs. Acadia Healthcare | HCA Holdings vs. Tenet Healthcare | HCA Holdings vs. US Physicalrapy | HCA Holdings vs. DaVita HealthCare Partners |
| Acadia Healthcare vs. Encompass Health Corp | Acadia Healthcare vs. Pennant Group | Acadia Healthcare vs. Select Medical Holdings | Acadia Healthcare vs. Addus HomeCare |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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