Correlation Between Molina Healthcare and United Fire
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and United Fire 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 United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and United Fire Group, you can compare the effects of market volatilities on Molina Healthcare and United Fire 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 United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and United Fire.
Diversification Opportunities for Molina Healthcare and United Fire
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Molina and United is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group 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 United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and United Fire go up and down completely randomly.
Pair Corralation between Molina Healthcare and United Fire
Considering the 90-day investment horizon Molina Healthcare is expected to generate 0.92 times more return on investment than United Fire. However, Molina Healthcare is 1.09 times less risky than United Fire. It trades about -0.09 of its potential returns per unit of risk. United Fire Group is currently generating about -0.21 per unit of risk. If you would invest 29,450 in Molina Healthcare on October 23, 2024 and sell it today you would lose (829.00) from holding Molina Healthcare or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. United Fire Group
Performance |
| Timeline |
| Molina Healthcare |
| United Fire Group |
Molina Healthcare and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and United Fire
The main advantage of trading using opposite Molina Healthcare and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Directory Find actively traded commodities issued by global exchanges |