Correlation Between Smith Nephew and Tenet Healthcare

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

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

Diversification Opportunities for Smith Nephew and Tenet Healthcare

0.21

Correlation Coefficient

Smith Nephew  Tenet Healthcare

Modest diversification

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

Pair Corralation between Smith Nephew and Tenet Healthcare

Considering the 90-day investment horizon Smith Nephew is expected to generate 3.39 times less return on investment than Tenet Healthcare. But when comparing it to its historical volatility, Smith Nephew SNATS is 1.42 times less risky than Tenet Healthcare. It trades about 0.04 of its potential returns per unit of risk. Tenet Healthcare is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,038  in Tenet Healthcare on October 9, 2025 and sell it today you would earn a total of  12,369  from holding Tenet Healthcare or generate 153.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Smith Nephew SNATS  vs.  Tenet Healthcare

Smith Nephew SNATS

Risk-Adjusted Performance

Weakest

Over the last 90 days Smith Nephew SNATS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Smith Nephew is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Tenet Healthcare

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Tenet Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Tenet Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2026.

Pair Trading with Smith Nephew and Tenet Healthcare

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

The idea behind Smith Nephew SNATS and Tenet 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.