Correlation Between HCA Healthcare and M Winkworth

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

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

Diversification Opportunities for HCA Healthcare and M Winkworth

-0.16

Correlation Coefficient

HCA Healthcare  M Winkworth

Good diversification

The 3 months correlation between HCA and WINK is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare and M Winkworth PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Winkworth PLC 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 M Winkworth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Winkworth PLC has no effect on the direction of HCA Healthcare i.e., HCA Healthcare and M Winkworth go up and down completely randomly.

Pair Corralation between HCA Healthcare and M Winkworth

Assuming the 90 days trading horizon HCA Healthcare is expected to under-perform the M Winkworth. But the stock apears to be less risky and, when comparing its historical volatility, HCA Healthcare is 1.62 times less risky than M Winkworth. The stock trades about -0.12 of its potential returns per unit of risk. The M Winkworth PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  18,982  in M Winkworth PLC on October 26, 2024 and sell it today you would earn a total of  2,418  from holding M Winkworth PLC or generate 12.74% 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.  M Winkworth PLC

HCA Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HCA Healthcare 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.

M Winkworth PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M Winkworth PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, M Winkworth unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCA Healthcare and M Winkworth

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

The idea behind HCA Healthcare and M Winkworth PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.