Correlation Between International Consolidated and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both International Consolidated and HCA 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 International Consolidated and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and HCA Healthcare, you can compare the effects of market volatilities on International Consolidated and HCA 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 International Consolidated with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and HCA Healthcare.
Diversification Opportunities for International Consolidated and HCA Healthcare
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and HCA is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of International Consolidated i.e., International Consolidated and HCA Healthcare go up and down completely randomly.
Pair Corralation between International Consolidated and HCA Healthcare
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.36 times more return on investment than HCA Healthcare. However, International Consolidated is 1.36 times more volatile than HCA Healthcare. It trades about 0.63 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.46 per unit of risk. If you would invest 23,770 in International Consolidated Airlines on September 13, 2024 and sell it today you would earn a total of 5,030 from holding International Consolidated Airlines or generate 21.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. HCA Healthcare
Performance |
| Timeline |
| International Consolidated |
| HCA Healthcare |
International Consolidated and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and HCA Healthcare
The main advantage of trading using opposite International Consolidated and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, HCA 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| International Consolidated vs. Europa Metals | International Consolidated vs. Jacquet Metal Service | International Consolidated vs. Sovereign Metals | International Consolidated vs. Sealed Air Corp |
| HCA Healthcare vs. International Consolidated Airlines | HCA Healthcare vs. United Airlines Holdings | HCA Healthcare vs. Monster Beverage Corp | HCA Healthcare vs. Teradata Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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