Correlation Between HCA Holdings and Oncology Institute

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

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

Diversification Opportunities for HCA Holdings and Oncology Institute

0.81

Correlation Coefficient

HCA Holdings  Oncology Institute

Very poor diversification

The 3 months correlation between HCA and Oncology is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and Oncology Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncology Institute 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 Oncology Institute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncology Institute has no effect on the direction of HCA Holdings i.e., HCA Holdings and Oncology Institute go up and down completely randomly.

Pair Corralation between HCA Holdings and Oncology Institute

Considering the 90-day investment horizon HCA Holdings is expected to generate 0.24 times more return on investment than Oncology Institute. However, HCA Holdings is 4.15 times less risky than Oncology Institute. It trades about -0.16 of its potential returns per unit of risk. Oncology Institute is currently generating about -0.13 per unit of risk. If you would invest  39,517  in HCA Holdings on September 3, 2024 and sell it today you would lose (6,795) from holding HCA Holdings or give up 17.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

HCA Holdings  vs.  Oncology Institute

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.

Oncology Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oncology Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with HCA Holdings and Oncology Institute

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

The idea behind HCA Holdings and Oncology Institute 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..