Correlation Between Elevance Health and Centene Corp
Can any of the company-specific risk be diversified away by investing in both Elevance Health and Centene Corp 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 Elevance Health and Centene Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elevance Health and Centene Corp, you can compare the effects of market volatilities on Elevance Health and Centene Corp 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 Elevance Health with a short position of Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elevance Health and Centene Corp.
Diversification Opportunities for Elevance Health and Centene Corp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Elevance and Centene is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Elevance Health 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 Elevance Health are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Elevance Health i.e., Elevance Health and Centene Corp go up and down completely randomly.
Pair Corralation between Elevance Health and Centene Corp
Considering the 90-day investment horizon Elevance Health is expected to generate 0.78 times more return on investment than Centene Corp. However, Elevance Health is 1.28 times less risky than Centene Corp. It trades about -0.06 of its potential returns per unit of risk. Centene Corp is currently generating about -0.06 per unit of risk. If you would invest 49,663 in Elevance Health on August 27, 2024 and sell it today you would lose (9,408) from holding Elevance Health or give up 18.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elevance Health vs. Centene Corp
Performance |
| Timeline |
| Elevance Health |
| Centene Corp |
Elevance Health and Centene Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elevance Health and Centene Corp
The main advantage of trading using opposite Elevance Health and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health position performs unexpectedly, Centene Corp 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 Centene Corp will offset losses from the drop in Centene Corp's long position.| Elevance Health vs. Cigna Corp | Elevance Health vs. UnitedHealth Group Incorporated | Elevance Health vs. Centene Corp | Elevance Health vs. Molina Healthcare |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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