Correlation Between Anthem and Molina Healthcare

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

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

Diversification Opportunities for Anthem and Molina Healthcare

0.55

Correlation Coefficient

Anthem  Molina Healthcare

Very weak diversification

The 3 months correlation between Anthem and Molina is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Anthem Inc and Molina Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molina Healthcare and Anthem 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 Anthem Inc are associated (or correlated) with Molina Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molina Healthcare has no effect on the direction of Anthem i.e., Anthem and Molina Healthcare go up and down completely randomly.

Pair Corralation between Anthem and Molina Healthcare

If you would invest  48,258  in Anthem Inc on January 30, 2024 and sell it today you would earn a total of  0.00  from holding Anthem Inc or generate 0.0% return on investment over 90 days.

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

Anthem Inc  vs.  Molina Healthcare

Anthem Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Molina Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molina Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Molina Healthcare is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Anthem and Molina Healthcare

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

The idea behind Anthem Inc and Molina Healthcare 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.