Correlation Between Humana and AMN Healthcare
Can any of the company-specific risk be diversified away by investing in both Humana and AMN Healthcare 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 Humana and AMN Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and AMN Healthcare Services, you can compare the effects of market volatilities on Humana and AMN Healthcare 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 Humana with a short position of AMN Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and AMN Healthcare.
Diversification Opportunities for Humana and AMN Healthcare
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Humana and AMN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services and Humana 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 Humana Inc are associated (or correlated) with AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Humana i.e., Humana and AMN Healthcare go up and down completely randomly.
Pair Corralation between Humana and AMN Healthcare
Considering the 90-day investment horizon Humana Inc is expected to generate 0.69 times more return on investment than AMN Healthcare. However, Humana Inc is 1.44 times less risky than AMN Healthcare. It trades about -0.04 of its potential returns per unit of risk. AMN Healthcare Services is currently generating about -0.08 per unit of risk. If you would invest 53,827 in Humana Inc on August 26, 2024 and sell it today you would lose (24,016) from holding Humana Inc or give up 44.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. AMN Healthcare Services
Performance |
| Timeline |
| Humana Inc |
| AMN Healthcare Services |
Humana and AMN Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and AMN Healthcare
The main advantage of trading using opposite Humana and AMN Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, AMN Healthcare 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 AMN Healthcare will offset losses from the drop in AMN Healthcare's long position.| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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