Correlation Between Molina Healthcare and Boot Barn

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

By analyzing existing cross correlation between Molina Healthcare and Boot Barn Holdings, you can compare the effects of market volatilities on Molina Healthcare and Boot Barn 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 Boot Barn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Boot Barn.

Diversification Opportunities for Molina Healthcare and Boot Barn

-0.22

Correlation Coefficient

Molina Healthcare  Boot Barn

Very good diversification

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

Pair Corralation between Molina Healthcare and Boot Barn

Considering the 90-day investment horizon Molina Healthcare is expected to generate 0.94 times more return on investment than Boot Barn. However, Molina Healthcare is 1.06 times less risky than Boot Barn. It trades about 0.06 of its potential returns per unit of risk. Boot Barn Holdings is currently generating about -0.19 per unit of risk. If you would invest  29,178  in Molina Healthcare on December 17, 2024 and sell it today you would earn a total of  2,419  from holding Molina Healthcare or generate 8.29% return on investment over 90 days.

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

Molina Healthcare  vs.  Boot Barn Holdings

Molina Healthcare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molina Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Molina Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Boot Barn Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Molina Healthcare and Boot Barn

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

The idea behind Molina Healthcare and Boot Barn Holdings 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.