Correlation Between Aileron Therapeutics and Centene Corp

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

Diversification Opportunities for Aileron Therapeutics and Centene Corp

  Correlation Coefficient

Very good diversification

The 3 months correlation between Aileron and Centene is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aileron Therapeutics and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Aileron Therapeutics 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 Aileron Therapeutics 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 Aileron Therapeutics i.e., Aileron Therapeutics and Centene Corp go up and down completely randomly.

Pair Corralation between Aileron Therapeutics and Centene Corp

Given the investment horizon of 90 days Aileron Therapeutics is expected to under-perform the Centene Corp. In addition to that, Aileron Therapeutics is 3.06 times more volatile than Centene Corp. It trades about -0.03 of its total potential returns per unit of risk. Centene Corp is currently generating about 0.02 per unit of volatility. If you would invest  6,882  in Centene Corp on July 1, 2022 and sell it today you would earn a total of  851.00  from holding Centene Corp or generate 12.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

Aileron Therapeutics  vs.  Centene Corp

 Performance (%) 
Aileron Therapeutics 
Aileron Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aileron Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Aileron Therapeutics may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Aileron 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

Aileron Therapeutics and Centene Corp Volatility Contrast

   Predicted Return Density   

Pair Trading with Aileron Therapeutics and Centene Corp

The main advantage of trading using opposite Aileron Therapeutics and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aileron Therapeutics 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.
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The idea behind Aileron Therapeutics 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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