Correlation Between DaVita HealthCare and Amazon

Can any of the company-specific risk be diversified away by investing in both DaVita HealthCare and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on DaVita HealthCare and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of DaVita HealthCare and Amazon.

Diversification Opportunities for DaVita HealthCare and Amazon

0.68

Correlation Coefficient

DaVita HealthCare Amazon

Poor diversification

The 3 months correlation between DaVita and Amazon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DaVita HealthCare Partners and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of DaVita HealthCare i.e., DaVita HealthCare and Amazon go up and down completely randomly.

Pair Corralation between DaVita HealthCare and Amazon

Considering the 90-day investment horizon DaVita HealthCare Partners is expected to under-perform the Amazon. In addition to that, DaVita HealthCare is 1.04 times more volatile than Amazon Inc. It trades about -0.19 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.13 per unit of volatility. If you would invest  9,350  in Amazon Inc on December 26, 2022 and sell it today you would earn a total of  463.00  from holding Amazon Inc or generate 4.95% return on investment over 90 days.

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

DaVita HealthCare Partners  vs.  Amazon Inc

DaVita HealthCare

DaVita Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in DaVita HealthCare Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DaVita HealthCare is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amazon Inc

Amazon Performance

9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DaVita HealthCare and Amazon

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

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The idea behind DaVita HealthCare Partners and Amazon Inc 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.