Correlation Between Molina Healthcare and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and STMicroelectronics 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 STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and STMicroelectronics NV, you can compare the effects of market volatilities on Molina Healthcare and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and STMicroelectronics.
Diversification Opportunities for Molina Healthcare and STMicroelectronics
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Molina and STMicroelectronics is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and STMicroelectronics go up and down completely randomly.
Pair Corralation between Molina Healthcare and STMicroelectronics
Assuming the 90 days trading horizon Molina Healthcare is expected to generate 1.11 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Molina Healthcare is 1.44 times less risky than STMicroelectronics. It trades about 0.07 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,420 in STMicroelectronics NV on October 25, 2024 and sell it today you would earn a total of 48.00 from holding STMicroelectronics NV or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. STMicroelectronics NV
Performance |
| Timeline |
| Molina Healthcare |
| STMicroelectronics |
Molina Healthcare and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and STMicroelectronics
The main advantage of trading using opposite Molina Healthcare and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc | Molina Healthcare vs. Apple Inc |
| STMicroelectronics vs. GameStop Corp | STMicroelectronics vs. Games Workshop Group | STMicroelectronics vs. Geely Automobile Holdings | STMicroelectronics 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |