Correlation Between Humana and Invesco DWA
Can any of the company-specific risk be diversified away by investing in both Humana and Invesco DWA 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 Invesco DWA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Invesco DWA SmallCap, you can compare the effects of market volatilities on Humana and Invesco DWA 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 Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Invesco DWA.
Diversification Opportunities for Humana and Invesco DWA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Humana and Invesco is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Invesco DWA SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA SmallCap 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 Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA SmallCap has no effect on the direction of Humana i.e., Humana and Invesco DWA go up and down completely randomly.
Pair Corralation between Humana and Invesco DWA
Considering the 90-day investment horizon Humana Inc is expected to generate 1.64 times more return on investment than Invesco DWA. However, Humana is 1.64 times more volatile than Invesco DWA SmallCap. It trades about 0.24 of its potential returns per unit of risk. Invesco DWA SmallCap is currently generating about 0.26 per unit of risk. If you would invest 26,109 in Humana Inc on August 28, 2024 and sell it today you would earn a total of 4,309 from holding Humana Inc or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Invesco DWA SmallCap
Performance |
| Timeline |
| Humana Inc |
| Invesco DWA SmallCap |
Humana and Invesco DWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Invesco DWA
The main advantage of trading using opposite Humana and Invesco DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Invesco DWA 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 Invesco DWA will offset losses from the drop in Invesco DWA's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Invesco DWA vs. Invesco DWA Momentum | Invesco DWA vs. Invesco DWA Developed | Invesco DWA vs. Invesco DWA Emerging | Invesco DWA vs. First Trust Small |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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