Correlation Between Molina Healthcare and TTM TECHNOLOGIES

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

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

Diversification Opportunities for Molina Healthcare and TTM TECHNOLOGIES

-0.33

Correlation Coefficient

Molina Healthcare  TTM TECHNOLOGIES

Very good diversification

The 3 months correlation between Molina and TTM is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and TTM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM TECHNOLOGIES and Molina Healthcare 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 Molina Healthcare are associated (or correlated) with TTM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM TECHNOLOGIES has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and TTM TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Molina Healthcare and TTM TECHNOLOGIES

Assuming the 90 days trading horizon Molina Healthcare is expected to under-perform the TTM TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Molina Healthcare is 1.17 times less risky than TTM TECHNOLOGIES. The stock trades about -0.07 of its potential returns per unit of risk. The TTM TECHNOLOGIES is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,770  in TTM TECHNOLOGIES on October 24, 2024 and sell it today you would earn a total of  690.00  from holding TTM TECHNOLOGIES or generate 38.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Molina Healthcare  vs.  TTM TECHNOLOGIES

Molina Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molina Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TTM TECHNOLOGIES

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TTM TECHNOLOGIES are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TTM TECHNOLOGIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molina Healthcare and TTM TECHNOLOGIES

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

The idea behind Molina Healthcare and TTM TECHNOLOGIES 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.