Correlation Between HCA Holdings and Veltex
Can any of the company-specific risk be diversified away by investing in both HCA Holdings and Veltex 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 Veltex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Holdings and Veltex, you can compare the effects of market volatilities on HCA Holdings and Veltex 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 Veltex. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Holdings and Veltex.
Diversification Opportunities for HCA Holdings and Veltex
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HCA and Veltex is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and Veltex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veltex 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 Veltex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veltex has no effect on the direction of HCA Holdings i.e., HCA Holdings and Veltex go up and down completely randomly.
Pair Corralation between HCA Holdings and Veltex
Considering the 90-day investment horizon HCA Holdings is expected to generate 4.99 times less return on investment than Veltex. But when comparing it to its historical volatility, HCA Holdings is 8.16 times less risky than Veltex. It trades about 0.04 of its potential returns per unit of risk. Veltex is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Veltex on September 26, 2024 and sell it today you would lose (33.11) from holding Veltex or give up 80.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.87% |
| Values | Daily Returns |
HCA Holdings vs. Veltex
Performance |
| Timeline |
| HCA Holdings |
| Veltex |
HCA Holdings and Veltex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Holdings and Veltex
The main advantage of trading using opposite HCA Holdings and Veltex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Holdings position performs unexpectedly, Veltex 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 Veltex will offset losses from the drop in Veltex's long position.| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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