Correlation Between Anthem and Express Scripts

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

By analyzing existing cross correlation between Anthem Inc and Express Scripts Holding, you can compare the effects of market volatilities on Anthem and Express Scripts 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 Anthem with a short position of Express Scripts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anthem and Express Scripts.

Diversification Opportunities for Anthem and Express Scripts

0.0

Correlation Coefficient

Anthem  Express Scripts

Pay attention - limited upside

The 3 months correlation between Anthem and Express is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Anthem Inc and Express Scripts Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Express Scripts Holding and Anthem 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 Anthem Inc are associated (or correlated) with Express Scripts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Express Scripts Holding has no effect on the direction of Anthem i.e., Anthem and Express Scripts go up and down completely randomly.

Pair Corralation between Anthem and Express Scripts

If you would invest (100.00) in Express Scripts Holding on February 2, 2024 and sell it today you would earn a total of  100.00  from holding Express Scripts Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Anthem Inc  vs.  Express Scripts Holding

Anthem Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anthem Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Anthem is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Express Scripts Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Express Scripts Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Express Scripts is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Anthem and Express Scripts

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

The idea behind Anthem Inc and Express Scripts Holding 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.