Correlation Between HCA Holdings and Enhabit
Can any of the company-specific risk be diversified away by investing in both HCA Holdings and Enhabit 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 Enhabit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Holdings and Enhabit, you can compare the effects of market volatilities on HCA Holdings and Enhabit 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 Enhabit. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Holdings and Enhabit.
Diversification Opportunities for HCA Holdings and Enhabit
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HCA and Enhabit is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and Enhabit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enhabit 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 Enhabit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enhabit has no effect on the direction of HCA Holdings i.e., HCA Holdings and Enhabit go up and down completely randomly.
Pair Corralation between HCA Holdings and Enhabit
Considering the 90-day investment horizon HCA Holdings is expected to generate 0.42 times more return on investment than Enhabit. However, HCA Holdings is 2.38 times less risky than Enhabit. It trades about 0.05 of its potential returns per unit of risk. Enhabit is currently generating about -0.02 per unit of risk. If you would invest 23,136 in HCA Holdings on August 24, 2024 and sell it today you would earn a total of 9,357 from holding HCA Holdings or generate 40.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Holdings vs. Enhabit
Performance |
| Timeline |
| HCA Holdings |
| Enhabit |
HCA Holdings and Enhabit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Holdings and Enhabit
The main advantage of trading using opposite HCA Holdings and Enhabit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Holdings position performs unexpectedly, Enhabit 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 Enhabit will offset losses from the drop in Enhabit's long position.| HCA Holdings vs. Acadia Healthcare | HCA Holdings vs. Tenet Healthcare | HCA Holdings vs. US Physicalrapy | HCA Holdings vs. DaVita HealthCare Partners |
| Enhabit vs. The Ensign Group | Enhabit vs. Pennant Group | Enhabit vs. InnovAge Holding Corp | Enhabit vs. National HealthCare |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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