Correlation Between Centene Corp and HCA Holdings
Can any of the company-specific risk be diversified away by investing in both Centene Corp 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 Centene Corp and HCA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and HCA Holdings, you can compare the effects of market volatilities on Centene Corp 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 Centene Corp with a short position of HCA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and HCA Holdings.
Diversification Opportunities for Centene Corp and HCA Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centene and HCA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and HCA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Holdings and Centene Corp 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 Centene Corp 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 Centene Corp i.e., Centene Corp and HCA Holdings go up and down completely randomly.
Pair Corralation between Centene Corp and HCA Holdings
Considering the 90-day investment horizon Centene Corp is expected to generate 1.34 times more return on investment than HCA Holdings. However, Centene Corp is 1.34 times more volatile than HCA Holdings. It trades about 0.0 of its potential returns per unit of risk. HCA Holdings is currently generating about -0.27 per unit of risk. If you would invest 6,165 in Centene Corp on August 28, 2024 and sell it today you would lose (22.00) from holding Centene Corp or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Centene Corp vs. HCA Holdings
Performance |
| Timeline |
| Centene Corp |
| HCA Holdings |
Centene Corp and HCA Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and HCA Holdings
The main advantage of trading using opposite Centene Corp and HCA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp 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.| Centene Corp vs. Humana Inc | Centene Corp vs. Elevance Health | Centene Corp vs. UnitedHealth Group Incorporated | Centene Corp vs. CVS Health Corp |
| HCA Holdings vs. Elevance Health | HCA Holdings vs. Centene Corp | HCA Holdings vs. UnitedHealth Group Incorporated | HCA Holdings vs. CVS Health Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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