Correlation Between Centene Corp and Elevance Health
Can any of the company-specific risk be diversified away by investing in both Centene Corp 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 Centene Corp and Elevance Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and Elevance Health, you can compare the effects of market volatilities on Centene Corp 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 Centene Corp with a short position of Elevance Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and Elevance Health.
Diversification Opportunities for Centene Corp and Elevance Health
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centene and Elevance is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Elevance Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevance Health and Centene Corp 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 Centene Corp 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 Centene Corp i.e., Centene Corp and Elevance Health go up and down completely randomly.
Pair Corralation between Centene Corp and Elevance Health
Considering the 90-day investment horizon Centene Corp is expected to generate 29.07 times less return on investment than Elevance Health. In addition to that, Centene Corp is 1.2 times more volatile than Elevance Health. It trades about 0.01 of its total potential returns per unit of risk. Elevance Health is currently generating about 0.17 per unit of volatility. If you would invest 36,726 in Elevance Health on December 29, 2024 and sell it today you would earn a total of 6,474 from holding Elevance Health or generate 17.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Centene Corp vs. Elevance Health
Performance |
Timeline |
Centene Corp |
Elevance Health |
Centene Corp and Elevance Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Centene Corp and Elevance Health
The main advantage of trading using opposite Centene Corp and Elevance Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp 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.Centene Corp vs. Humana Inc | Centene Corp vs. Elevance Health | Centene Corp vs. UnitedHealth Group Incorporated | Centene Corp vs. CVS Health Corp |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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