Correlation Between Tenet Healthcare and Jack Nathan

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

By analyzing existing cross correlation between Tenet Healthcare and Jack Nathan Medical, you can compare the effects of market volatilities on Tenet Healthcare and Jack Nathan 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 Jack Nathan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenet Healthcare and Jack Nathan.

Diversification Opportunities for Tenet Healthcare and Jack Nathan

-0.3

Correlation Coefficient

Tenet Healthcare  Jack Nathan

Very good diversification

The 3 months correlation between Tenet and Jack is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tenet Healthcare and Jack Nathan Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Nathan Medical 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 Jack Nathan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Nathan Medical has no effect on the direction of Tenet Healthcare i.e., Tenet Healthcare and Jack Nathan go up and down completely randomly.

Pair Corralation between Tenet Healthcare and Jack Nathan

Considering the 90-day investment horizon Tenet Healthcare is expected to under-perform the Jack Nathan. But the stock apears to be less risky and, when comparing its historical volatility, Tenet Healthcare is 4.8 times less risky than Jack Nathan. The stock trades about -0.05 of its potential returns per unit of risk. The Jack Nathan Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Jack Nathan Medical on September 2, 2024 and sell it today you would earn a total of  0.60  from holding Jack Nathan Medical or generate 35.29% return on investment over 90 days.

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

Tenet Healthcare  vs.  Jack Nathan Medical

Tenet Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jack Nathan Medical

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Tenet Healthcare and Jack Nathan

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

The idea behind Tenet Healthcare and Jack Nathan Medical 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 Transaction History module to view history of all your transactions and understand their impact on performance.