Correlation Between United Fire and Molina Healthcare
Can any of the company-specific risk be diversified away by investing in both United Fire 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 United Fire and Molina Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and Molina Healthcare, you can compare the effects of market volatilities on United Fire 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 United Fire with a short position of Molina Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Molina Healthcare.
Diversification Opportunities for United Fire and Molina Healthcare
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Molina is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and United Fire 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 United Fire Group 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 United Fire i.e., United Fire and Molina Healthcare go up and down completely randomly.
Pair Corralation between United Fire and Molina Healthcare
Given the investment horizon of 90 days United Fire Group is expected to generate 1.07 times more return on investment than Molina Healthcare. However, United Fire is 1.07 times more volatile than Molina Healthcare. It trades about 0.04 of its potential returns per unit of risk. Molina Healthcare is currently generating about -0.01 per unit of risk. If you would invest 2,051 in United Fire Group on November 3, 2024 and sell it today you would earn a total of 430.00 from holding United Fire Group or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Molina Healthcare
Performance |
| Timeline |
| United Fire Group |
| Molina Healthcare |
United Fire and Molina Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Molina Healthcare
The main advantage of trading using opposite United Fire and Molina Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire 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.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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