Correlation Between Bowhead Specialty and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Molina 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 Bowhead Specialty and Molina Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bowhead Specialty Holdings and Molina Healthcare, you can compare the effects of market volatilities on Bowhead Specialty and Molina 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 Bowhead Specialty with a short position of Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Molina Healthcare.
Diversification Opportunities for Bowhead Specialty and Molina Healthcare
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bowhead and Molina is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and Bowhead Specialty 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 Bowhead Specialty Holdings are associated (or correlated) with Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Molina Healthcare go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Molina Healthcare
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to under-perform the Molina Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Bowhead Specialty Holdings is 1.21 times less risky than Molina Healthcare. The stock trades about -0.16 of its potential returns per unit of risk. The Molina Healthcare is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 28,724 in Molina Healthcare on November 3, 2024 and sell it today you would earn a total of 2,317 from holding Molina Healthcare or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Molina Healthcare
Performance |
| Timeline |
| Bowhead Specialty |
| Molina Healthcare |
Bowhead Specialty and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Molina Healthcare
The main advantage of trading using opposite Bowhead Specialty and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Molina 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 Molina Healthcare will offset losses from the drop in Molina Healthcare's long position.| Bowhead Specialty vs. Kingdee International Software | Bowhead Specialty vs. DHI Group | Bowhead Specialty vs. Uber Technologies | Bowhead Specialty vs. Life360, Common Stock |
| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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