Correlation Between Volkswagen and HCA Healthcare

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

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

Diversification Opportunities for Volkswagen and HCA Healthcare

-0.14

Correlation Coefficient

Volkswagen  HCA Healthcare

Good diversification

The 3 months correlation between Volkswagen and HCA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Volkswagen 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 Volkswagen AG Non Vtg are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Volkswagen i.e., Volkswagen and HCA Healthcare go up and down completely randomly.

Pair Corralation between Volkswagen and HCA Healthcare

Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG Non Vtg is 4.97 times less risky than HCA Healthcare. The stock trades about -0.01 of its potential returns per unit of risk. The HCA Healthcare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  25,339  in HCA Healthcare on October 25, 2024 and sell it today you would earn a total of  6,853  from holding HCA Healthcare or generate 27.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Volkswagen AG Non Vtg  vs.  HCA Healthcare

Volkswagen AG Non

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Non Vtg are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Volkswagen is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Volkswagen and HCA Healthcare

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

The idea behind Volkswagen AG Non Vtg and HCA Healthcare 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.