Correlation Between DaVita HealthCare and Amedisys

Can any of the company-specific risk be diversified away by investing in both DaVita HealthCare and Amedisys 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 DaVita HealthCare and Amedisys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DaVita HealthCare Partners and Amedisys, you can compare the effects of market volatilities on DaVita HealthCare and Amedisys 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 DaVita HealthCare with a short position of Amedisys. Check out your portfolio center. Please also check ongoing floating volatility patterns of DaVita HealthCare and Amedisys.

Diversification Opportunities for DaVita HealthCare and Amedisys

0.0

Correlation Coefficient

DaVita HealthCare  Amedisys

Pay attention - limited upside

The 3 months correlation between DaVita and Amedisys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DaVita HealthCare Partners and Amedisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedisys and DaVita 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 DaVita HealthCare Partners are associated (or correlated) with Amedisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedisys has no effect on the direction of DaVita HealthCare i.e., DaVita HealthCare and Amedisys go up and down completely randomly.

Pair Corralation between DaVita HealthCare and Amedisys

Considering the 90-day investment horizon DaVita HealthCare Partners is expected to generate 1.95 times more return on investment than Amedisys. However, DaVita HealthCare is 1.95 times more volatile than Amedisys. It trades about -0.05 of its potential returns per unit of risk. Amedisys is currently generating about -0.18 per unit of risk. If you would invest  16,519  in DaVita HealthCare Partners on September 15, 2024 and sell it today you would lose (1,246) from holding DaVita HealthCare Partners or give up 7.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DaVita HealthCare Partners  vs.  Amedisys

DaVita HealthCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DaVita HealthCare Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with DaVita HealthCare and Amedisys

The main advantage of trading using opposite DaVita HealthCare and Amedisys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DaVita HealthCare position performs unexpectedly, Amedisys 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 Amedisys will offset losses from the drop in Amedisys' long position.

The idea behind DaVita HealthCare Partners and Amedisys 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.

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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 Stocks Directory module to find actively traded stocks across global markets.