Correlation Between Molina Healthcare and Cencora

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

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

Diversification Opportunities for Molina Healthcare and Cencora

-0.47

Correlation Coefficient

Molina Healthcare  Cencora

Very good diversification

The 3 months correlation between Molina and Cencora is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Cencora go up and down completely randomly.

Pair Corralation between Molina Healthcare and Cencora

Considering the 90-day investment horizon Molina Healthcare is expected to under-perform the Cencora. In addition to that, Molina Healthcare is 2.76 times more volatile than Cencora. It trades about -0.02 of its total potential returns per unit of risk. Cencora is currently generating about 0.05 per unit of volatility. If you would invest  23,600  in Cencora on September 7, 2024 and sell it today you would earn a total of  831.00  from holding Cencora or generate 3.52% return on investment over 90 days.

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

Molina Healthcare  vs.  Cencora

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. Despite fairly strong basic indicators, Molina Healthcare is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Cencora

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Cencora is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Molina Healthcare and Cencora

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

The idea behind Molina Healthcare and Cencora 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.