Correlation Between DaVita HealthCare and American Shared
Can any of the company-specific risk be diversified away by investing in both DaVita HealthCare and American Shared 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 DaVita HealthCare and American Shared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DaVita HealthCare Partners and American Shared Hospital, you can compare the effects of market volatilities on DaVita HealthCare and American Shared 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 DaVita HealthCare with a short position of American Shared. Check out your portfolio center. Please also check ongoing floating volatility patterns of DaVita HealthCare and American Shared.
Diversification Opportunities for DaVita HealthCare and American Shared
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DaVita and American is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding DaVita HealthCare Partners and American Shared Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shared Hospital and DaVita 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 DaVita HealthCare Partners are associated (or correlated) with American Shared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shared Hospital has no effect on the direction of DaVita HealthCare i.e., DaVita HealthCare and American Shared go up and down completely randomly.
Pair Corralation between DaVita HealthCare and American Shared
Considering the 90-day investment horizon DaVita HealthCare Partners is expected to under-perform the American Shared. But the stock apears to be less risky and, when comparing its historical volatility, DaVita HealthCare Partners is 2.58 times less risky than American Shared. The stock trades about -0.45 of its potential returns per unit of risk. The American Shared Hospital is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 266.00 in American Shared Hospital on January 20, 2024 and sell it today you would earn a total of 33.00 from holding American Shared Hospital or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DaVita HealthCare Partners vs. American Shared Hospital
Performance |
| Timeline |
| DaVita HealthCare |
| American Shared Hospital |
DaVita HealthCare and American Shared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DaVita HealthCare and American Shared
The main advantage of trading using opposite DaVita HealthCare and American Shared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DaVita HealthCare position performs unexpectedly, American Shared 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 American Shared will offset losses from the drop in American Shared's long position.| DaVita HealthCare vs. Certara | DaVita HealthCare vs. HealthStream | DaVita HealthCare vs. Evolent Health | DaVita HealthCare vs. Streamline Health Solutions |
| American Shared vs. Certara | American Shared vs. HealthStream | American Shared vs. Evolent Health | American Shared vs. Streamline Health Solutions |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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