Correlation Between Deluxe and Centene

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

By analyzing existing cross correlation between Deluxe and Centene 425 percent, you can compare the effects of market volatilities on Deluxe and Centene 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 Deluxe with a short position of Centene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deluxe and Centene.

Diversification Opportunities for Deluxe and Centene

-0.15

Correlation Coefficient

Deluxe  Centene

Good diversification

The 3 months correlation between Deluxe and Centene is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Centene 425 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene 425 percent and Deluxe 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 Deluxe are associated (or correlated) with Centene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene 425 percent has no effect on the direction of Deluxe i.e., Deluxe and Centene go up and down completely randomly.

Pair Corralation between Deluxe and Centene

Considering the 90-day investment horizon Deluxe is expected to under-perform the Centene. In addition to that, Deluxe is 2.58 times more volatile than Centene 425 percent. It trades about -0.18 of its total potential returns per unit of risk. Centene 425 percent is currently generating about -0.22 per unit of volatility. If you would invest  9,716  in Centene 425 percent on October 11, 2024 and sell it today you would lose (314.00) from holding Centene 425 percent or give up 3.23% of portfolio value over 90 days.

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

Deluxe  vs.  Centene 425 percent

Deluxe

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Centene 425 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centene 425 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deluxe and Centene

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

The idea behind Deluxe and Centene 425 percent 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.