Correlation Between Humana and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Humana and McCormick Company 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 McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and McCormick Company Incorporated, you can compare the effects of market volatilities on Humana and McCormick Company 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 McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and McCormick Company.
Diversification Opportunities for Humana and McCormick Company
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Humana and McCormick is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick Company 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 McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick Company has no effect on the direction of Humana i.e., Humana and McCormick Company go up and down completely randomly.
Pair Corralation between Humana and McCormick Company
Considering the 90-day investment horizon Humana Inc is expected to under-perform the McCormick Company. In addition to that, Humana is 1.56 times more volatile than McCormick Company Incorporated. It trades about -0.06 of its total potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.01 per unit of volatility. If you would invest 8,128 in McCormick Company Incorporated on September 12, 2024 and sell it today you would earn a total of 47.00 from holding McCormick Company Incorporated or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. McCormick Company Incorporated
Performance |
| Timeline |
| Humana Inc |
| McCormick Company |
Humana and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and McCormick Company
The main advantage of trading using opposite Humana and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, McCormick Company 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 McCormick Company will offset losses from the drop in McCormick Company's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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