Correlation Between Centene Corp and Pennant
Can any of the company-specific risk be diversified away by investing in both Centene Corp and Pennant 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 Pennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and Pennant Group, you can compare the effects of market volatilities on Centene Corp and Pennant 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 Pennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and Pennant.
Diversification Opportunities for Centene Corp and Pennant
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centene and Pennant is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group 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 Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Centene Corp i.e., Centene Corp and Pennant go up and down completely randomly.
Pair Corralation between Centene Corp and Pennant
Considering the 90-day investment horizon Centene Corp is expected to under-perform the Pennant. But the stock apears to be less risky and, when comparing its historical volatility, Centene Corp is 1.6 times less risky than Pennant. The stock trades about -0.03 of its potential returns per unit of risk. The Pennant Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,019 in Pennant Group on September 2, 2024 and sell it today you would earn a total of 2,099 from holding Pennant Group or generate 205.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centene Corp vs. Pennant Group
Performance |
| Timeline |
| Centene Corp |
| Pennant Group |
Centene Corp and Pennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and Pennant
The main advantage of trading using opposite Centene Corp and Pennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp position performs unexpectedly, Pennant 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 Pennant will offset losses from the drop in Pennant'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 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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