Correlation Between Acadia Healthcare and HCA Holdings

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Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and HCA Holdings 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 Acadia Healthcare and HCA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Healthcare and HCA Holdings, you can compare the effects of market volatilities on Acadia Healthcare and HCA Holdings 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 Acadia Healthcare with a short position of HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and HCA Holdings.

Diversification Opportunities for Acadia Healthcare and HCA Holdings

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Acadia and HCA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings and Acadia 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 Acadia Healthcare are associated (or correlated) with HCA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Holdings has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and HCA Holdings go up and down completely randomly.

Pair Corralation between Acadia Healthcare and HCA Holdings

Given the investment horizon of 90 days Acadia Healthcare is expected to under-perform the HCA Holdings. In addition to that, Acadia Healthcare is 1.96 times more volatile than HCA Holdings. It trades about -0.05 of its total potential returns per unit of risk. HCA Holdings is currently generating about 0.02 per unit of volatility. If you would invest  36,028  in HCA Holdings on May 7, 2025 and sell it today you would earn a total of  292.00  from holding HCA Holdings or generate 0.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Acadia Healthcare  vs.  HCA Holdings

 Performance 
       Timeline  
Acadia Healthcare 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Acadia Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
HCA Holdings 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in HCA Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HCA Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Acadia Healthcare and HCA Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acadia Healthcare and HCA Holdings

The main advantage of trading using opposite Acadia Healthcare and HCA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, HCA Holdings 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 Holdings will offset losses from the drop in HCA Holdings' long position.
The idea behind Acadia Healthcare and HCA Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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