Correlation Between HCA Healthcare and CAP LEASE

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

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

Diversification Opportunities for HCA Healthcare and CAP LEASE

-0.46

Correlation Coefficient

HCA Healthcare  CAP LEASE

Very good diversification

The 3 months correlation between HCA and CAP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and CAP LEASE go up and down completely randomly.

Pair Corralation between HCA Healthcare and CAP LEASE

Assuming the 90 days trading horizon HCA Healthcare is expected to generate 0.51 times more return on investment than CAP LEASE. However, HCA Healthcare is 1.98 times less risky than CAP LEASE. It trades about 0.11 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.09 per unit of risk. If you would invest  29,855  in HCA Healthcare on December 29, 2024 and sell it today you would earn a total of  4,394  from holding HCA Healthcare or generate 14.72% return on investment over 90 days.

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

HCA Healthcare  vs.  CAP LEASE AVIATION

HCA Healthcare

Risk-Adjusted Performance

OK

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

CAP LEASE AVIATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with HCA Healthcare and CAP LEASE

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

The idea behind HCA Healthcare and CAP LEASE AVIATION 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.