Correlation Between Humana and Pennant
Can any of the company-specific risk be diversified away by investing in both Humana and Pennant 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 Pennant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Pennant Group, you can compare the effects of market volatilities on Humana and Pennant 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 Pennant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Pennant.
Diversification Opportunities for Humana and Pennant
Significant diversification
The 3 months correlation between Humana and Pennant is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group 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 Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Humana i.e., Humana and Pennant go up and down completely randomly.
Pair Corralation between Humana and Pennant
Considering the 90-day investment horizon Humana Inc is expected to under-perform the Pennant. In addition to that, Humana is 1.02 times more volatile than Pennant Group. It trades about -0.06 of its total potential returns per unit of risk. Pennant Group is currently generating about 0.15 per unit of volatility. If you would invest 1,331 in Pennant Group on September 2, 2024 and sell it today you would earn a total of 1,787 from holding Pennant Group or generate 134.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Pennant Group
Performance |
| Timeline |
| Humana Inc |
| Pennant Group |
Humana and Pennant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Pennant
The main advantage of trading using opposite Humana and Pennant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Pennant 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 Pennant will offset losses from the drop in Pennant'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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