Correlation Between Humana and Capital Group
Can any of the company-specific risk be diversified away by investing in both Humana and Capital Group 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 Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Capital Group Fixed, you can compare the effects of market volatilities on Humana and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Capital Group.
Diversification Opportunities for Humana and Capital Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Humana and Capital is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of Humana i.e., Humana and Capital Group go up and down completely randomly.
Pair Corralation between Humana and Capital Group
Considering the 90-day investment horizon Humana Inc is expected to generate 84.21 times more return on investment than Capital Group. However, Humana is 84.21 times more volatile than Capital Group Fixed. It trades about 0.21 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.47 per unit of risk. If you would invest 25,777 in Humana Inc on August 30, 2024 and sell it today you would earn a total of 3,891 from holding Humana Inc or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Capital Group Fixed
Performance |
| Timeline |
| Humana Inc |
| Capital Group Fixed |
Humana and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Capital Group
The main advantage of trading using opposite Humana and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Capital Group vs. Valued Advisers Trust | Capital Group vs. Columbia Diversified Fixed | Capital Group vs. Principal Exchange Traded Funds | Capital Group vs. Doubleline Etf Trust |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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