Correlation Between Alignment Healthcare and Centene Corp

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Can any of the company-specific risk be diversified away by investing in both Alignment Healthcare and Centene 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 Alignment Healthcare and Centene Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alignment Healthcare and Centene Corp, you can compare the effects of market volatilities on Alignment Healthcare and Centene 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 Alignment Healthcare with a short position of Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alignment Healthcare and Centene Corp.

Diversification Opportunities for Alignment Healthcare and Centene Corp

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Alignment and Centene is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alignment Healthcare and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Alignment 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 Alignment Healthcare are associated (or correlated) with Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Alignment Healthcare i.e., Alignment Healthcare and Centene Corp go up and down completely randomly.

Pair Corralation between Alignment Healthcare and Centene Corp

Given the investment horizon of 90 days Alignment Healthcare is expected to under-perform the Centene Corp. In addition to that, Alignment Healthcare is 2.13 times more volatile than Centene Corp. It trades about 0.0 of its total potential returns per unit of risk. Centene Corp is currently generating about 0.03 per unit of volatility. If you would invest  6,621  in Centene Corp on July 8, 2022 and sell it today you would earn a total of  1,380  from holding Centene Corp or generate 20.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy78.07%
ValuesDaily Returns

Alignment Healthcare  vs.  Centene Corp

 Performance (%) 
       Timeline  
Alignment Healthcare 
Alignment Performance
0 of 100
Over the last 90 days Alignment Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alignment Price Channel

Centene Corp 
Centene Performance
0 of 100
Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Centene Price Channel

Alignment Healthcare and Centene Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alignment Healthcare and Centene Corp

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

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