Correlation Between Elevance Health and Owens Minor

Can any of the company-specific risk be diversified away by investing in both Elevance Health and Owens Minor 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 Elevance Health and Owens Minor into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Elevance Health and Owens Minor

0.85

Correlation Coefficient

Elevance Health  Owens Minor

Very poor diversification

The 3 months correlation between Elevance and Owens is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health and Owens Minor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Minor and Elevance 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 Elevance Health are associated (or correlated) with Owens Minor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Minor has no effect on the direction of Elevance Health i.e., Elevance Health and Owens Minor go up and down completely randomly.

Pair Corralation between Elevance Health and Owens Minor

Considering the 90-day investment horizon Elevance Health is expected to under-perform the Owens Minor. But the stock apears to be less risky and, when comparing its historical volatility, Elevance Health is 1.85 times less risky than Owens Minor. The stock trades about -0.21 of its potential returns per unit of risk. The Owens Minor is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,357  in Owens Minor on September 5, 2024 and sell it today you would earn a total of  116.00  from holding Owens Minor or generate 8.55% return on investment over 90 days.

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

Elevance Health  vs.  Owens Minor

Elevance Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Owens Minor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Owens Minor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Owens Minor is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Elevance Health and Owens Minor

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

The idea behind Elevance Health and Owens Minor 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.