Correlation Between United Breweries and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 United Breweries and Molina Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and Molina Healthcare, you can compare the effects of market volatilities on United Breweries 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 United Breweries with a short position of Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Molina Healthcare.
Diversification Opportunities for United Breweries and Molina Healthcare
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Molina is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and United Breweries 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 United Breweries Co 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 United Breweries i.e., United Breweries and Molina Healthcare go up and down completely randomly.
Pair Corralation between United Breweries and Molina Healthcare
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.67 times more return on investment than Molina Healthcare. However, United Breweries Co is 1.49 times less risky than Molina Healthcare. It trades about 0.03 of its potential returns per unit of risk. Molina Healthcare is currently generating about -0.01 per unit of risk. If you would invest 1,036 in United Breweries Co on November 3, 2024 and sell it today you would earn a total of 114.00 from holding United Breweries Co or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Molina Healthcare
Performance |
| Timeline |
| United Breweries |
| Molina Healthcare |
United Breweries and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Molina Healthcare
The main advantage of trading using opposite United Breweries and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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.| United Breweries vs. GEAR4MUSIC LS 10 | United Breweries vs. Air Transport Services | United Breweries vs. USWE SPORTS AB | United Breweries vs. BII Railway Transportation |
| Molina Healthcare vs. SIVERS SEMICONDUCTORS AB | Molina Healthcare vs. NorAm Drilling AS | Molina Healthcare vs. Volkswagen AG | Molina Healthcare vs. Darden Restaurants |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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