Correlation Between Brookdale Senior and Humana
Can any of the company-specific risk be diversified away by investing in both Brookdale Senior and Humana 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 Brookdale Senior and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookdale Senior Living and Humana Inc, you can compare the effects of market volatilities on Brookdale Senior and Humana 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 Brookdale Senior with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookdale Senior and Humana.
Diversification Opportunities for Brookdale Senior and Humana
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookdale and Humana is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Brookdale Senior Living and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Brookdale Senior 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 Brookdale Senior Living are associated (or correlated) with Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Brookdale Senior i.e., Brookdale Senior and Humana go up and down completely randomly.
Pair Corralation between Brookdale Senior and Humana
Considering the 90-day investment horizon Brookdale Senior Living is expected to under-perform the Humana. In addition to that, Brookdale Senior is 1.08 times more volatile than Humana Inc. It trades about -0.14 of its total potential returns per unit of risk. Humana Inc is currently generating about 0.23 per unit of volatility. If you would invest 25,555 in Humana Inc on September 4, 2024 and sell it today you would earn a total of 3,758 from holding Humana Inc or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookdale Senior Living vs. Humana Inc
Performance |
| Timeline |
| Brookdale Senior Living |
| Humana Inc |
Brookdale Senior and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookdale Senior and Humana
The main advantage of trading using opposite Brookdale Senior and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookdale Senior position performs unexpectedly, Humana 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 Humana will offset losses from the drop in Humana's long position.| Brookdale Senior vs. Humana Inc | Brookdale Senior vs. Cigna Corp | Brookdale Senior vs. Elevance Health | Brookdale Senior vs. Centene Corp |
| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
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 the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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