Correlation Between Centene Corp and Patterson Companies

Can any of the company-specific risk be diversified away by investing in both Centene Corp and Patterson Companies 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 Patterson Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centene Corp and Patterson Companies, you can compare the effects of market volatilities on Centene Corp and Patterson Companies 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 Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and Patterson Companies.

Diversification Opportunities for Centene Corp and Patterson Companies

-0.55

Correlation Coefficient

Centene Corp  Patterson Companies

Excellent diversification

The 3 months correlation between Centene and Patterson is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies 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 Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of Centene Corp i.e., Centene Corp and Patterson Companies go up and down completely randomly.

Pair Corralation between Centene Corp and Patterson Companies

Considering the 90-day investment horizon Centene Corp is expected to generate 1.99 times less return on investment than Patterson Companies. In addition to that, Centene Corp is 21.12 times more volatile than Patterson Companies. It trades about 0.01 of its total potential returns per unit of risk. Patterson Companies is currently generating about 0.21 per unit of volatility. If you would invest  3,085  in Patterson Companies on December 29, 2024 and sell it today you would earn a total of  36.00  from holding Patterson Companies or generate 1.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Centene Corp  vs.  Patterson Companies

Centene Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Centene Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Patterson Companies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Patterson Companies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Centene Corp and Patterson Companies

The main advantage of trading using opposite Centene Corp and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.

The idea behind Centene Corp and Patterson Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.