Correlation Between Tenet Healthcare and WashTec AG
Can any of the company-specific risk be diversified away by investing in both Tenet Healthcare and WashTec AG 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 WashTec AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenet Healthcare and WashTec AG, you can compare the effects of market volatilities on Tenet Healthcare and WashTec AG 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 WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenet Healthcare and WashTec AG.
Diversification Opportunities for Tenet Healthcare and WashTec AG
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tenet and WashTec is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tenet Healthcare and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Tenet Healthcare i.e., Tenet Healthcare and WashTec AG go up and down completely randomly.
Pair Corralation between Tenet Healthcare and WashTec AG
Considering the 90-day investment horizon Tenet Healthcare is expected to generate 0.9 times more return on investment than WashTec AG. However, Tenet Healthcare is 1.11 times less risky than WashTec AG. It trades about 0.07 of its potential returns per unit of risk. WashTec AG is currently generating about 0.05 per unit of risk. If you would invest 8,794 in Tenet Healthcare on December 10, 2024 and sell it today you would earn a total of 3,955 from holding Tenet Healthcare or generate 44.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Tenet Healthcare vs. WashTec AG
Performance |
| Timeline |
| Tenet Healthcare |
| WashTec AG |
Tenet Healthcare and WashTec AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenet Healthcare and WashTec AG
The main advantage of trading using opposite Tenet Healthcare and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenet Healthcare position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG's long position.| Tenet Healthcare vs. Acadia Healthcare | ||
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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