Correlation Between HCA Healthcare, and Royal Caribbean

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

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

Diversification Opportunities for HCA Healthcare, and Royal Caribbean

-0.82

Correlation Coefficient

HCA Healthcare,  Royal Caribbean

Pay attention - limited upside

The 3 months correlation between HCA and Royal is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding HCA Healthcare, and Royal Caribbean Cruises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Cruises 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Cruises has no effect on the direction of HCA Healthcare, i.e., HCA Healthcare, and Royal Caribbean go up and down completely randomly.

Pair Corralation between HCA Healthcare, and Royal Caribbean

Assuming the 90 days trading horizon HCA Healthcare, is expected to generate 0.64 times more return on investment than Royal Caribbean. However, HCA Healthcare, is 1.57 times less risky than Royal Caribbean. It trades about -0.21 of its potential returns per unit of risk. Royal Caribbean Cruises is currently generating about -0.15 per unit of risk. If you would invest  9,757  in HCA Healthcare, on October 5, 2024 and sell it today you would lose (507.00) from holding HCA Healthcare, or give up 5.2% of portfolio value over 90 days.

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

HCA Healthcare,  vs.  Royal Caribbean Cruises

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. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Royal Caribbean Cruises

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Caribbean Cruises are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Royal Caribbean sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HCA Healthcare, and Royal Caribbean

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

The idea behind HCA Healthcare, and Royal Caribbean Cruises 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.

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 the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.