Correlation Between Chemed Corp and Humana
Can any of the company-specific risk be diversified away by investing in both Chemed Corp 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 Chemed Corp and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemed Corp and Humana Inc, you can compare the effects of market volatilities on Chemed Corp 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 Chemed Corp with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemed Corp and Humana.
Diversification Opportunities for Chemed Corp and Humana
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chemed and Humana is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chemed Corp and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Chemed Corp 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 Chemed Corp 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 Chemed Corp i.e., Chemed Corp and Humana go up and down completely randomly.
Pair Corralation between Chemed Corp and Humana
Considering the 90-day investment horizon Chemed Corp is expected to generate 1.87 times less return on investment than Humana. But when comparing it to its historical volatility, Chemed Corp is 2.95 times less risky than Humana. It trades about 0.36 of its potential returns per unit of risk. Humana Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemed Corp vs. Humana Inc
Performance |
| Timeline |
| Chemed Corp |
| Humana Inc |
Chemed Corp and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemed Corp and Humana
The main advantage of trading using opposite Chemed Corp and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemed Corp 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.| Chemed Corp vs. Humana Inc | Chemed Corp vs. Cigna Corp | Chemed Corp vs. Elevance Health | Chemed Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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