Correlation Between Tenet Healthcare and Apple
Can any of the company-specific risk be diversified away by investing in both Tenet Healthcare and Apple 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 Tenet Healthcare and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenet Healthcare and Apple Inc, you can compare the effects of market volatilities on Tenet Healthcare and Apple 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 Tenet Healthcare with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenet Healthcare and Apple.
Diversification Opportunities for Tenet Healthcare and Apple
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tenet and Apple is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tenet Healthcare and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Tenet 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 Tenet Healthcare are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Tenet Healthcare i.e., Tenet Healthcare and Apple go up and down completely randomly.
Pair Corralation between Tenet Healthcare and Apple
Considering the 90-day investment horizon Tenet Healthcare is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, Tenet Healthcare is 1.08 times less risky than Apple. The stock trades about -0.34 of its potential returns per unit of risk. The Apple Inc is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 17,608 in Apple Inc on January 19, 2024 and sell it today you would lose (904.00) from holding Apple Inc or give up 5.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tenet Healthcare vs. Apple Inc
Performance |
| Timeline |
| Tenet Healthcare |
| Apple Inc |
Tenet Healthcare and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tenet Healthcare and Apple
The main advantage of trading using opposite Tenet Healthcare and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenet Healthcare position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind Tenet Healthcare and Apple Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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