Correlation Between Laboratory and Ardent Health

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

By analyzing existing cross correlation between Laboratory of and Ardent Health Partners,, you can compare the effects of market volatilities on Laboratory and Ardent Health 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 Laboratory with a short position of Ardent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Ardent Health.

Diversification Opportunities for Laboratory and Ardent Health

-0.7

Correlation Coefficient

Laboratory  Ardent Health

Excellent diversification

The 3 months correlation between Laboratory and Ardent is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Ardent Health Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardent Health Partners, and Laboratory 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 Laboratory of are associated (or correlated) with Ardent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardent Health Partners, has no effect on the direction of Laboratory i.e., Laboratory and Ardent Health go up and down completely randomly.

Pair Corralation between Laboratory and Ardent Health

Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.32 times more return on investment than Ardent Health. However, Laboratory of is 3.14 times less risky than Ardent Health. It trades about 0.09 of its potential returns per unit of risk. Ardent Health Partners, is currently generating about -0.04 per unit of risk. If you would invest  24,116  in Laboratory of on November 28, 2024 and sell it today you would earn a total of  1,171  from holding Laboratory of or generate 4.86% return on investment over 90 days.

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

Laboratory of  vs.  Ardent Health Partners,

Laboratory

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Ardent Health Partners,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ardent Health Partners, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental 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 Laboratory and Ardent Health

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

The idea behind Laboratory of and Ardent Health Partners, 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.