Correlation Between HCA Holdings and DXP Enterprises
Can any of the company-specific risk be diversified away by investing in both HCA Holdings and DXP Enterprises 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 DXP Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCA Holdings and DXP Enterprises, you can compare the effects of market volatilities on HCA Holdings and DXP Enterprises 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 DXP Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCA Holdings and DXP Enterprises.
Diversification Opportunities for HCA Holdings and DXP Enterprises
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HCA and DXP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding HCA Holdings and DXP Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXP Enterprises 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 DXP Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXP Enterprises has no effect on the direction of HCA Holdings i.e., HCA Holdings and DXP Enterprises go up and down completely randomly.
Pair Corralation between HCA Holdings and DXP Enterprises
Considering the 90-day investment horizon HCA Holdings is expected to under-perform the DXP Enterprises. But the etf apears to be less risky and, when comparing its historical volatility, HCA Holdings is 1.31 times less risky than DXP Enterprises. The etf trades about -0.35 of its potential returns per unit of risk. The DXP Enterprises is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 5,221 in DXP Enterprises on January 20, 2024 and sell it today you would lose (206.00) from holding DXP Enterprises or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCA Holdings vs. DXP Enterprises
Performance |
| Timeline |
| HCA Holdings |
| DXP Enterprises |
HCA Holdings and DXP Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCA Holdings and DXP Enterprises
The main advantage of trading using opposite HCA Holdings and DXP Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCA Holdings position performs unexpectedly, DXP Enterprises 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 DXP Enterprises will offset losses from the drop in DXP Enterprises' long position.| HCA Holdings vs. Elevance Health | HCA Holdings vs. Centene Corp | HCA Holdings vs. UnitedHealth Group Incorporated | HCA Holdings vs. CVS Health Corp |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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