Correlation Between Molina Healthcare and Intuitive Surgical

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

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

Diversification Opportunities for Molina Healthcare and Intuitive Surgical

-0.65

Correlation Coefficient

Molina Healthcare  Intuitive Surgical

Excellent diversification

The 3 months correlation between Molina and Intuitive is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical 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 Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Molina Healthcare and Intuitive Surgical

Considering the 90-day investment horizon Molina Healthcare is expected to under-perform the Intuitive Surgical. In addition to that, Molina Healthcare is 2.05 times more volatile than Intuitive Surgical. It trades about -0.07 of its total potential returns per unit of risk. Intuitive Surgical is currently generating about 0.11 per unit of volatility. If you would invest  48,344  in Intuitive Surgical on August 31, 2024 and sell it today you would earn a total of  5,511  from holding Intuitive Surgical or generate 11.4% return on investment over 90 days.

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

Molina Healthcare  vs.  Intuitive Surgical

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Intuitive Surgical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Molina Healthcare and Intuitive Surgical

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

The idea behind Molina Healthcare and Intuitive Surgical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.