Correlation Between Molina Healthcare and Elevance Health
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and Elevance 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 Elevance 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 Elevance Health, you can compare the effects of market volatilities on Molina Healthcare and Elevance 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 Elevance Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Elevance Health.
Diversification Opportunities for Molina Healthcare and Elevance Health
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Molina and Elevance is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Elevance Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevance 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 Elevance Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevance Health has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Elevance Health go up and down completely randomly.
Pair Corralation between Molina Healthcare and Elevance Health
Considering the 90-day investment horizon Molina Healthcare is expected to generate 3.11 times more return on investment than Elevance Health. However, Molina Healthcare is 3.11 times more volatile than Elevance Health. It trades about 0.1 of its potential returns per unit of risk. Elevance Health is currently generating about -0.09 per unit of risk. If you would invest 27,500 in Molina Healthcare on August 24, 2024 and sell it today you would earn a total of 2,107 from holding Molina Healthcare or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. Elevance Health
Performance |
| Timeline |
| Molina Healthcare |
| Elevance Health |
Molina Healthcare and Elevance Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and Elevance Health
The main advantage of trading using opposite Molina Healthcare and Elevance Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, Elevance 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 Elevance Health will offset losses from the drop in Elevance Health's long position.| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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