Correlation Between Tenet Healthcare and Community Health
Can any of the company-specific risk be diversified away by investing in both Tenet Healthcare and Community Health 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 Tenet Healthcare and Community Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenet Healthcare and Community Health Systems, you can compare the effects of market volatilities on Tenet Healthcare and Community Health 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 Tenet Healthcare with a short position of Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenet Healthcare and Community Health.
Diversification Opportunities for Tenet Healthcare and Community Health
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tenet and Community is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tenet Healthcare and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems and Tenet 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 Tenet Healthcare are associated (or correlated) with Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Tenet Healthcare i.e., Tenet Healthcare and Community Health go up and down completely randomly.
Pair Corralation between Tenet Healthcare and Community Health
Considering the 90-day investment horizon Tenet Healthcare is expected to generate 0.45 times more return on investment than Community Health. However, Tenet Healthcare is 2.23 times less risky than Community Health. It trades about 0.11 of its potential returns per unit of risk. Community Health Systems is currently generating about 0.03 per unit of risk. If you would invest 4,460 in Tenet Healthcare on August 24, 2024 and sell it today you would earn a total of 9,903 from holding Tenet Healthcare or generate 222.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenet Healthcare vs. Community Health Systems
Performance |
| Timeline |
| Tenet Healthcare |
| Community Health Systems |
Tenet Healthcare and Community Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenet Healthcare and Community Health
The main advantage of trading using opposite Tenet Healthcare and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenet Healthcare position performs unexpectedly, Community Health 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 Community Health will offset losses from the drop in Community Health's long position.| Tenet Healthcare vs. Acadia Healthcare | Tenet Healthcare vs. HCA Holdings | Tenet Healthcare vs. US Physicalrapy | Tenet Healthcare vs. DaVita HealthCare Partners |
| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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