Correlation Between Oncology Institute and DaVita HealthCare

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

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

Diversification Opportunities for Oncology Institute and DaVita HealthCare

-0.58

Correlation Coefficient

Oncology Institute  DaVita HealthCare

Excellent diversification

The 3 months correlation between Oncology and DaVita is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Oncology Institute and DaVita HealthCare Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DaVita HealthCare and Oncology Institute 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 Oncology Institute 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 Oncology Institute i.e., Oncology Institute and DaVita HealthCare go up and down completely randomly.

Pair Corralation between Oncology Institute and DaVita HealthCare

Considering the 90-day investment horizon Oncology Institute is expected to generate 3.32 times more return on investment than DaVita HealthCare. However, Oncology Institute is 3.32 times more volatile than DaVita HealthCare Partners. It trades about 0.07 of its potential returns per unit of risk. DaVita HealthCare Partners is currently generating about 0.07 per unit of risk. If you would invest  43.00  in Oncology Institute on February 14, 2024 and sell it today you would earn a total of  43.90  from holding Oncology Institute or generate 102.09% return on investment over 90 days.

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

Oncology Institute  vs.  DaVita HealthCare Partners

Oncology Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oncology Institute has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

DaVita HealthCare

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DaVita HealthCare Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, DaVita HealthCare may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Oncology Institute and DaVita HealthCare

The main advantage of trading using opposite Oncology Institute and DaVita HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oncology Institute 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 Oncology Institute 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.