Correlation Between Bright Health and Magellan Health

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

Diversification Opportunities for Bright Health and Magellan Health

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Bright and Magellan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bright Health Group and Magellan Health Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Health and Bright Health 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 Bright Health Group are associated (or correlated) with Magellan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Health has no effect on the direction of Bright Health i.e., Bright Health and Magellan Health go up and down completely randomly.

Pair Corralation between Bright Health and Magellan Health

If you would invest (100.00)  in Magellan Health on May 18, 2022 and sell it today you would earn a total of  100.00  from holding Magellan Health or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Bright Health Group  vs.  Magellan Health Inc

 Performance (%) 
       Timeline  
Bright Health Group 
Bright Performance
0 of 100
Over the last 90 days Bright Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Bright Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bright Price Channel

Magellan Health 
Magellan Performance
0 of 100
Over the last 90 days Magellan Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Magellan Health is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Bright Health and Magellan Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bright Health and Magellan Health

The main advantage of trading using opposite Bright Health and Magellan Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Health position performs unexpectedly, Magellan Health 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 Magellan Health will offset losses from the drop in Magellan Health's long position.
The idea behind Bright Health Group and Magellan Health 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.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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