Correlation Between Kindred Healthcare and WellCare Health
Can any of the company-specific risk be diversified away by investing in both Kindred Healthcare and WellCare 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 Kindred Healthcare and WellCare Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kindred Healthcare and WellCare Health Plans, you can compare the effects of market volatilities on Kindred Healthcare and WellCare 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 Kindred Healthcare with a short position of WellCare Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kindred Healthcare and WellCare Health.
Diversification Opportunities for Kindred Healthcare and WellCare Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kindred and WellCare is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kindred Healthcare and WellCare Health Plans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WellCare Health Plans and Kindred 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 Kindred Healthcare are associated (or correlated) with WellCare Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WellCare Health Plans has no effect on the direction of Kindred Healthcare i.e., Kindred Healthcare and WellCare Health go up and down completely randomly.
Pair Corralation between Kindred Healthcare and WellCare Health
If you would invest (100.00) in WellCare Health Plans on January 20, 2024 and sell it today you would earn a total of 100.00 from holding WellCare Health Plans or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kindred Healthcare vs. WellCare Health Plans
Performance |
| Timeline |
| Kindred Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| WellCare Health Plans |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kindred Healthcare and WellCare Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kindred Healthcare and WellCare Health
The main advantage of trading using opposite Kindred Healthcare and WellCare Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kindred Healthcare position performs unexpectedly, WellCare 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 WellCare Health will offset losses from the drop in WellCare Health's long position.| Kindred Healthcare vs. Enersys | Kindred Healthcare vs. Sandstorm Gold Ltd | Kindred Healthcare vs. Iridium Communications | Kindred Healthcare vs. Encore Wire |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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