Correlation Between Centene Corp and ModivCare
Can any of the company-specific risk be diversified away by investing in both Centene Corp and ModivCare 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 ModivCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and ModivCare, you can compare the effects of market volatilities on Centene Corp and ModivCare 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 ModivCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and ModivCare.
Diversification Opportunities for Centene Corp and ModivCare
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centene and ModivCare is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and ModivCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ModivCare 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 ModivCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ModivCare has no effect on the direction of Centene Corp i.e., Centene Corp and ModivCare go up and down completely randomly.
Pair Corralation between Centene Corp and ModivCare
Considering the 90-day investment horizon Centene Corp is expected to under-perform the ModivCare. But the stock apears to be less risky and, when comparing its historical volatility, Centene Corp is 3.61 times less risky than ModivCare. The stock trades about -0.22 of its potential returns per unit of risk. The ModivCare is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 499.00 in ModivCare on November 29, 2024 and sell it today you would lose (56.00) from holding ModivCare or give up 11.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centene Corp vs. ModivCare
Performance |
| Timeline |
| Centene Corp |
| ModivCare |
Centene Corp and ModivCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and ModivCare
The main advantage of trading using opposite Centene Corp and ModivCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp position performs unexpectedly, ModivCare 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 ModivCare will offset losses from the drop in ModivCare's long position.| Centene Corp vs. Humana Inc | Centene Corp vs. Elevance Health | Centene Corp vs. UnitedHealth Group Incorporated | Centene Corp vs. CVS Health Corp |
| ModivCare vs. The Ensign Group | ModivCare vs. Select Medical Holdings | ModivCare vs. Encompass Health Corp | ModivCare vs. InnovAge Holding 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 CEOs Directory module to screen CEOs from public companies around the world.
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