Correlation Between Molina Healthcare and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and Bowhead Specialty 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 Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and Bowhead Specialty Holdings, you can compare the effects of market volatilities on Molina Healthcare and Bowhead Specialty 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 Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Bowhead Specialty.
Diversification Opportunities for Molina Healthcare and Bowhead Specialty
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Molina and Bowhead is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty 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 Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Molina Healthcare and Bowhead Specialty
Considering the 90-day investment horizon Molina Healthcare is expected to generate 1.21 times more return on investment than Bowhead Specialty. However, Molina Healthcare is 1.21 times more volatile than Bowhead Specialty Holdings. It trades about 0.19 of its potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about -0.16 per unit of risk. If you would invest 28,724 in Molina Healthcare on November 3, 2024 and sell it today you would earn a total of 2,317 from holding Molina Healthcare or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Molina Healthcare |
| Bowhead Specialty |
Molina Healthcare and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and Bowhead Specialty
The main advantage of trading using opposite Molina Healthcare and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
| Bowhead Specialty vs. Kingdee International Software | Bowhead Specialty vs. DHI Group | Bowhead Specialty vs. Uber Technologies | Bowhead Specialty vs. Life360, Common Stock |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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