Correlation Between Premier and Cerner Corp

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

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

Diversification Opportunities for Premier and Cerner Corp

0.21

Correlation Coefficient

Premier  Cerner Corp

Modest diversification

The 3 months correlation between Premier and Cerner is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Premier and Cerner Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerner Corp and Premier 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 Premier are associated (or correlated) with Cerner Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerner Corp has no effect on the direction of Premier i.e., Premier and Cerner Corp go up and down completely randomly.

Pair Corralation between Premier and Cerner Corp

If you would invest  9,492  in Cerner Corp on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Cerner Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Premier  vs.  Cerner Corp

Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cerner Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Premier and Cerner Corp

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

The idea behind Premier and Cerner Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.