Correlation Between Molina Healthcare and OPKO HEALTH
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and OPKO HEALTH 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 OPKO HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and OPKO HEALTH, you can compare the effects of market volatilities on Molina Healthcare and OPKO HEALTH 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 OPKO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and OPKO HEALTH.
Diversification Opportunities for Molina Healthcare and OPKO HEALTH
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Molina and OPKO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH 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 OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and OPKO HEALTH go up and down completely randomly.
Pair Corralation between Molina Healthcare and OPKO HEALTH
Assuming the 90 days trading horizon Molina Healthcare is expected to generate 1.36 times more return on investment than OPKO HEALTH. However, Molina Healthcare is 1.36 times more volatile than OPKO HEALTH. It trades about -0.13 of its potential returns per unit of risk. OPKO HEALTH is currently generating about -0.24 per unit of risk. If you would invest 28,050 in Molina Healthcare on October 22, 2024 and sell it today you would lose (940.00) from holding Molina Healthcare or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Molina Healthcare vs. OPKO HEALTH
Performance |
| Timeline |
| Molina Healthcare |
| OPKO HEALTH |
Molina Healthcare and OPKO HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and OPKO HEALTH
The main advantage of trading using opposite Molina Healthcare and OPKO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, OPKO HEALTH 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 OPKO HEALTH will offset losses from the drop in OPKO HEALTH's long position.| Molina Healthcare vs. United Breweries Co | Molina Healthcare vs. Tsingtao Brewery | Molina Healthcare vs. Thai Beverage Public | Molina Healthcare vs. Madison Square Garden |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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