Correlation Between Veltex and HCA Holdings
Can any of the company-specific risk be diversified away by investing in both Veltex and HCA Holdings 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 Veltex and HCA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veltex and HCA Holdings, you can compare the effects of market volatilities on Veltex and HCA Holdings 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 Veltex with a short position of HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veltex and HCA Holdings.
Diversification Opportunities for Veltex and HCA Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Veltex and HCA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Veltex and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings and Veltex 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 Veltex are associated (or correlated) with HCA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Holdings has no effect on the direction of Veltex i.e., Veltex and HCA Holdings go up and down completely randomly.
Pair Corralation between Veltex and HCA Holdings
Given the investment horizon of 90 days Veltex is expected to under-perform the HCA Holdings. In addition to that, Veltex is 3.6 times more volatile than HCA Holdings. It trades about -0.33 of its total potential returns per unit of risk. HCA Holdings is currently generating about -0.07 per unit of volatility. If you would invest 30,960 in HCA Holdings on October 15, 2024 and sell it today you would lose (678.00) from holding HCA Holdings or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veltex vs. HCA Holdings
Performance |
| Timeline |
| Veltex |
| HCA Holdings |
Veltex and HCA Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veltex and HCA Holdings
The main advantage of trading using opposite Veltex and HCA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veltex position performs unexpectedly, HCA Holdings 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 Holdings will offset losses from the drop in HCA Holdings' long position.The idea behind Veltex and HCA Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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