Correlation Between Express Scripts and Magellan Health

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Can any of the company-specific risk be diversified away by investing in both Express Scripts and Magellan 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 Express Scripts and Magellan Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Express Scripts Holding and Magellan Health, you can compare the effects of market volatilities on Express Scripts and Magellan 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 Express Scripts with a short position of Magellan Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Express Scripts and Magellan Health.

Diversification Opportunities for Express Scripts and Magellan Health

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Express and Magellan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Express Scripts Holding and Magellan Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Health and Express Scripts 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 Express Scripts Holding are associated (or correlated) with Magellan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Health has no effect on the direction of Express Scripts i.e., Express Scripts and Magellan Health go up and down completely randomly.

Pair Corralation between Express Scripts and Magellan Health

If you would invest (100.00) in Magellan Health on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Magellan Health or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Express Scripts Holding  vs.  Magellan Health

 Performance 
       Timeline  
Express Scripts Holding 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Express Scripts Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Express Scripts is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Magellan Health 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Magellan Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Magellan Health is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Express Scripts and Magellan Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Express Scripts and Magellan Health

The main advantage of trading using opposite Express Scripts and Magellan Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Express Scripts position performs unexpectedly, Magellan 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 Magellan Health will offset losses from the drop in Magellan Health's long position.
The idea behind Express Scripts Holding and Magellan Health 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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