Correlation Between HCA Holdings and Numinus Wellness

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

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

Diversification Opportunities for HCA Holdings and Numinus Wellness

-0.47

Correlation Coefficient

HCA Holdings  Numinus Wellness

Very good diversification

The 3 months correlation between HCA and Numinus is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and Numinus Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numinus Wellness and HCA Holdings 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 HCA Holdings are associated (or correlated) with Numinus Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numinus Wellness has no effect on the direction of HCA Holdings i.e., HCA Holdings and Numinus Wellness go up and down completely randomly.

Pair Corralation between HCA Holdings and Numinus Wellness

Considering the 90-day investment horizon HCA Holdings is expected to under-perform the Numinus Wellness. But the etf apears to be less risky and, when comparing its historical volatility, HCA Holdings is 7.22 times less risky than Numinus Wellness. The etf trades about -0.25 of its potential returns per unit of risk. The Numinus Wellness is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.36  in Numinus Wellness on September 23, 2024 and sell it today you would earn a total of  0.64  from holding Numinus Wellness or generate 27.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HCA Holdings  vs.  Numinus Wellness

HCA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HCA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Numinus Wellness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Numinus Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCA Holdings and Numinus Wellness

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

The idea behind HCA Holdings and Numinus Wellness 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.