Correlation Between Centene Corp and Si Bone

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

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

Diversification Opportunities for Centene Corp and Si Bone

0.22

Correlation Coefficient

Centene Corp  Si Bone

Modest diversification

The 3 months correlation between Centene and SIBN is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone 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 Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of Centene Corp i.e., Centene Corp and Si Bone go up and down completely randomly.

Pair Corralation between Centene Corp and Si Bone

Considering the 90-day investment horizon Centene Corp is expected to generate 16.14 times less return on investment than Si Bone. But when comparing it to its historical volatility, Centene Corp is 2.04 times less risky than Si Bone. It trades about 0.02 of its potential returns per unit of risk. Si Bone is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,327  in Si Bone on November 27, 2024 and sell it today you would earn a total of  514.00  from holding Si Bone or generate 38.73% return on investment over 90 days.

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

Centene Corp  vs.  Si Bone

Centene Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centene Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Si Bone

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Si Bone displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centene Corp and Si Bone

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

The idea behind Centene Corp and Si Bone 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.