Correlation Between Cencora and Owens Minor

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

By analyzing existing cross correlation between Cencora and Owens Minor, you can compare the effects of market volatilities on Cencora and Owens Minor 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 Cencora with a short position of Owens Minor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cencora and Owens Minor.

Diversification Opportunities for Cencora and Owens Minor

0.78

Correlation Coefficient

Cencora  Owens Minor

Poor diversification

The 3 months correlation between Cencora and Owens is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cencora and Owens Minor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Minor and Cencora 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 Cencora are associated (or correlated) with Owens Minor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Minor has no effect on the direction of Cencora i.e., Cencora and Owens Minor go up and down completely randomly.

Pair Corralation between Cencora and Owens Minor

Considering the 90-day investment horizon Cencora is expected to generate 0.3 times more return on investment than Owens Minor. However, Cencora is 3.35 times less risky than Owens Minor. It trades about -0.05 of its potential returns per unit of risk. Owens Minor is currently generating about -0.15 per unit of risk. If you would invest  24,300  in Cencora on January 29, 2024 and sell it today you would lose (212.00) from holding Cencora or give up 0.87% of portfolio value over 90 days.

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

Cencora  vs.  Owens Minor

Cencora

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Cencora may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Owens Minor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Owens Minor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating primary indicators, Owens Minor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cencora and Owens Minor

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

The idea behind Cencora and Owens Minor 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.