Correlation Between HCA Healthcare and Regions Financial

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

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

Diversification Opportunities for HCA Healthcare and Regions Financial

-0.17

Correlation Coefficient

HCA Healthcare  Regions Financial

Good diversification

The 3 months correlation between HCA and Regions is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and Regions Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial Corp and HCA 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 HCA Healthcare are associated (or correlated) with Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial Corp has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and Regions Financial go up and down completely randomly.

Pair Corralation between HCA Healthcare and Regions Financial

Assuming the 90 days trading horizon HCA Healthcare is expected to generate 1.4 times more return on investment than Regions Financial. However, HCA Healthcare is 1.4 times more volatile than Regions Financial Corp. It trades about 0.08 of its potential returns per unit of risk. Regions Financial Corp is currently generating about -0.08 per unit of risk. If you would invest  30,044  in HCA Healthcare on December 23, 2024 and sell it today you would earn a total of  2,938  from holding HCA Healthcare or generate 9.78% return on investment over 90 days.

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

HCA Healthcare  vs.  Regions Financial Corp

HCA Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Healthcare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HCA Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Regions Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regions Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with HCA Healthcare and Regions Financial

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

The idea behind HCA Healthcare and Regions Financial Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..