Correlation Between Centene Corp and Microbot Medical

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

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

Diversification Opportunities for Centene Corp and Microbot Medical

0.41

Correlation Coefficient

Centene Corp  Microbot Medical

Very weak diversification

The 3 months correlation between Centene and Microbot is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical and Centene Corp 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 Centene Corp are associated (or correlated) with Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Centene Corp i.e., Centene Corp and Microbot Medical go up and down completely randomly.

Pair Corralation between Centene Corp and Microbot Medical

Considering the 90-day investment horizon Centene Corp is expected to generate 0.59 times more return on investment than Microbot Medical. However, Centene Corp is 1.7 times less risky than Microbot Medical. It trades about -0.11 of its potential returns per unit of risk. Microbot Medical is currently generating about -0.57 per unit of risk. If you would invest  7,775  in Centene Corp on January 29, 2024 and sell it today you would lose (375.00) from holding Centene Corp or give up 4.82% of portfolio value over 90 days.

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

Centene Corp  vs.  Microbot Medical

Centene Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Centene Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Microbot Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microbot Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Centene Corp and Microbot Medical

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

The idea behind Centene Corp and Microbot Medical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.