Correlation Between Molina Healthcare and American Public
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and American Public 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 Molina Healthcare and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and American Public Education, you can compare the effects of market volatilities on Molina Healthcare and American Public 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 Molina Healthcare with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and American Public.
Diversification Opportunities for Molina Healthcare and American Public
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Molina and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and Molina Healthcare 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 Molina Healthcare are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and American Public go up and down completely randomly.
Pair Corralation between Molina Healthcare and American Public
Assuming the 90 days trading horizon Molina Healthcare is expected to generate 0.87 times more return on investment than American Public. However, Molina Healthcare is 1.15 times less risky than American Public. It trades about 0.2 of its potential returns per unit of risk. American Public Education is currently generating about -0.02 per unit of risk. If you would invest 27,650 in Molina Healthcare on October 30, 2024 and sell it today you would earn a total of 1,820 from holding Molina Healthcare or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. American Public Education
Performance |
| Timeline |
| Molina Healthcare |
| American Public Education |
Molina Healthcare and American Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and American Public
The main advantage of trading using opposite Molina Healthcare and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.| Molina Healthcare vs. CVR Medical Corp | Molina Healthcare vs. Peijia Medical Limited | Molina Healthcare vs. WillScot Mobile Mini | Molina Healthcare vs. Chengdu PUTIAN Telecommunications |
| American Public vs. alstria office REIT AG | American Public vs. Sunstone Hotel Investors | American Public vs. HYATT HOTELS A | American Public vs. MAVEN WIRELESS SWEDEN |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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