Correlation Between NYSE Composite and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Molina Healthcare 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 NYSE Composite and Molina Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Molina Healthcare, you can compare the effects of market volatilities on NYSE Composite and Molina Healthcare 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 NYSE Composite with a short position of Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Molina Healthcare.
Diversification Opportunities for NYSE Composite and Molina Healthcare
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Molina is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and NYSE Composite 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 NYSE Composite are associated (or correlated) with Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of NYSE Composite i.e., NYSE Composite and Molina Healthcare go up and down completely randomly.
Pair Corralation between NYSE Composite and Molina Healthcare
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.82 times less return on investment than Molina Healthcare. But when comparing it to its historical volatility, NYSE Composite is 6.74 times less risky than Molina Healthcare. It trades about 0.13 of its potential returns per unit of risk. Molina Healthcare is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Molina Healthcare
Performance |
| Timeline |
NYSE Composite and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Molina Healthcare
Pair trading matchups for Molina Healthcare
Pair Trading with NYSE Composite and Molina Healthcare
The main advantage of trading using opposite NYSE Composite and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Molina Healthcare 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 Molina Healthcare will offset losses from the drop in Molina Healthcare's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Molina Healthcare vs. Cigna Corp | Molina Healthcare vs. Humana Inc | Molina Healthcare vs. Elevance Health | Molina Healthcare vs. Alignment Healthcare LLC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |