Correlation Between Humana and Chemed Corp
Can any of the company-specific risk be diversified away by investing in both Humana and Chemed Corp 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 Chemed Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Chemed Corp, you can compare the effects of market volatilities on Humana and Chemed Corp 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 Chemed Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Chemed Corp.
Diversification Opportunities for Humana and Chemed Corp
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Humana and Chemed is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed Corp 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 Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of Humana i.e., Humana and Chemed Corp go up and down completely randomly.
Pair Corralation between Humana and Chemed Corp
Considering the 90-day investment horizon Humana Inc is expected to under-perform the Chemed Corp. In addition to that, Humana is 1.7 times more volatile than Chemed Corp. It trades about -0.06 of its total potential returns per unit of risk. Chemed Corp is currently generating about -0.02 per unit of volatility. If you would invest 56,871 in Chemed Corp on September 12, 2024 and sell it today you would lose (2,116) from holding Chemed Corp or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Chemed Corp
Performance |
| Timeline |
| Humana Inc |
| Chemed Corp |
Humana and Chemed Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Chemed Corp
The main advantage of trading using opposite Humana and Chemed Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Chemed Corp 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 Chemed Corp will offset losses from the drop in Chemed Corp's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Chemed Corp vs. Encompass Health Corp | Chemed Corp vs. Pennant Group | Chemed Corp vs. Acadia Healthcare | Chemed Corp vs. Select Medical Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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