Correlation Between Performance Food and HCA Healthcare

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

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

Diversification Opportunities for Performance Food and HCA Healthcare

0.32

Correlation Coefficient

Performance Food  HCA Healthcare

Weak diversification

The 3 months correlation between Performance and HCA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and HCA Healthcare go up and down completely randomly.

Pair Corralation between Performance Food and HCA Healthcare

Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the HCA Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 1.27 times less risky than HCA Healthcare. The stock trades about -0.14 of its potential returns per unit of risk. The HCA Healthcare is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  28,984  in HCA Healthcare on December 22, 2024 and sell it today you would earn a total of  1,726  from holding HCA Healthcare or generate 5.96% return on investment over 90 days.

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

Performance Food Group  vs.  HCA Healthcare

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

HCA Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HCA Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HCA Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Performance Food and HCA Healthcare

The main advantage of trading using opposite Performance Food and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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 Performance Food Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.