Correlation Between Brickell Biotech and Centene Corp

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

Diversification Opportunities for Brickell Biotech and Centene Corp

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Brickell and Centene is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Brickell Biotech Inc and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp and Brickell Biotech 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 Brickell Biotech 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 Brickell Biotech i.e., Brickell Biotech and Centene Corp go up and down completely randomly.

Pair Corralation between Brickell Biotech and Centene Corp

Considering the 90-day investment horizon Brickell Biotech is expected to under-perform the Centene Corp. In addition to that, Brickell Biotech is 4.16 times more volatile than Centene Corp. It trades about -0.09 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  8,478  in Centene Corp on July 1, 2022 and sell it today you would lose (710.00)  from holding Centene Corp or give up 8.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.89%
ValuesDaily Returns

Brickell Biotech Inc  vs.  Centene Corp

 Performance (%) 
       Timeline  
Brickell Biotech 
Brickell Performance
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Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
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

Brickell Biotech and Centene Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Brickell Biotech and Centene Corp

The main advantage of trading using opposite Brickell Biotech and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brickell Biotech 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.
Brickell Biotech vs. Microsoft Corp
The idea behind Brickell Biotech 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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