Correlation Between AMN Healthcare and DaVita HealthCare

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

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

Diversification Opportunities for AMN Healthcare and DaVita HealthCare

-0.67

Correlation Coefficient

AMN Healthcare  DaVita HealthCare

Excellent diversification

The 3 months correlation between AMN and DaVita is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and DaVita HealthCare Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DaVita HealthCare and AMN 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 AMN Healthcare Services are associated (or correlated) with DaVita HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DaVita HealthCare has no effect on the direction of AMN Healthcare i.e., AMN Healthcare and DaVita HealthCare go up and down completely randomly.

Pair Corralation between AMN Healthcare and DaVita HealthCare

Considering the 90-day investment horizon AMN Healthcare Services is expected to generate 0.88 times more return on investment than DaVita HealthCare. However, AMN Healthcare Services is 1.13 times less risky than DaVita HealthCare. It trades about 0.08 of its potential returns per unit of risk. DaVita HealthCare Partners is currently generating about 0.02 per unit of risk. If you would invest  5,798  in AMN Healthcare Services on February 5, 2024 and sell it today you would earn a total of  155.00  from holding AMN Healthcare Services or generate 2.67% return on investment over 90 days.

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

AMN Healthcare Services  vs.  DaVita HealthCare Partners

AMN Healthcare Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

DaVita HealthCare

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DaVita HealthCare Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DaVita HealthCare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMN Healthcare and DaVita HealthCare

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

The idea behind AMN Healthcare Services and DaVita HealthCare 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.