Correlation Between Centene Corp and Community Health
Can any of the company-specific risk be diversified away by investing in both Centene Corp and Community Health 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 Centene Corp and Community Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and Community Health Systems, you can compare the effects of market volatilities on Centene Corp and Community Health 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 Centene Corp with a short position of Community Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and Community Health.
Diversification Opportunities for Centene Corp and Community Health
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centene and Community is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems and Centene Corp 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 Centene Corp are associated (or correlated) with Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Centene Corp i.e., Centene Corp and Community Health go up and down completely randomly.
Pair Corralation between Centene Corp and Community Health
Considering the 90-day investment horizon Centene Corp is expected to generate 0.68 times more return on investment than Community Health. However, Centene Corp is 1.47 times less risky than Community Health. It trades about -0.03 of its potential returns per unit of risk. Community Health Systems is currently generating about -0.11 per unit of risk. If you would invest 7,756 in Centene Corp on January 26, 2024 and sell it today you would lose (137.00) from holding Centene Corp or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Centene Corp vs. Community Health Systems
Performance |
| Timeline |
| Centene Corp |
| Community Health Systems |
Centene Corp and Community Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and Community Health
The main advantage of trading using opposite Centene Corp and Community Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp position performs unexpectedly, Community Health 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 Community Health will offset losses from the drop in Community Health's long position.The idea behind Centene Corp and Community Health Systems 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.| Community Health vs. Universal Health Services | Community Health vs. HCA Holdings | Community Health vs. Surgery Partners | Community Health vs. Acadia Healthcare |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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