Correlation Between Molina Healthcare and Victorias Secret

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

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

Diversification Opportunities for Molina Healthcare and Victorias Secret

-0.54

Correlation Coefficient

Molina Healthcare  Victorias Secret

Excellent diversification

The 3 months correlation between Molina and Victorias is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret 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 Victorias Secret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victorias Secret has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and Victorias Secret go up and down completely randomly.

Pair Corralation between Molina Healthcare and Victorias Secret

Considering the 90-day investment horizon Molina Healthcare is expected to generate 0.4 times more return on investment than Victorias Secret. However, Molina Healthcare is 2.5 times less risky than Victorias Secret. It trades about 0.02 of its potential returns per unit of risk. Victorias Secret Co is currently generating about -0.28 per unit of risk. If you would invest  29,821  in Molina Healthcare on October 11, 2024 and sell it today you would earn a total of  78.00  from holding Molina Healthcare or generate 0.26% 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.  Victorias Secret Co

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 latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Victorias Secret

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molina Healthcare and Victorias Secret

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

The idea behind Molina Healthcare and Victorias Secret Co 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.