Correlation Between Humana and Vanguard
Can any of the company-specific risk be diversified away by investing in both Humana and Vanguard 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 Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Vanguard SP Small Cap, you can compare the effects of market volatilities on Humana and Vanguard 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 Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Vanguard.
Diversification Opportunities for Humana and Vanguard
Very good diversification
The 3 months correlation between Humana and Vanguard is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Vanguard SP Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP Small 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 Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP Small has no effect on the direction of Humana i.e., Humana and Vanguard go up and down completely randomly.
Pair Corralation between Humana and Vanguard
Considering the 90-day investment horizon Humana Inc is expected to under-perform the Vanguard. In addition to that, Humana is 1.75 times more volatile than Vanguard SP Small Cap. It trades about -0.05 of its total potential returns per unit of risk. Vanguard SP Small Cap is currently generating about 0.05 per unit of volatility. If you would invest 9,540 in Vanguard SP Small Cap on August 24, 2024 and sell it today you would earn a total of 3,003 from holding Vanguard SP Small Cap or generate 31.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Vanguard SP Small Cap
Performance |
| Timeline |
| Humana Inc |
| Vanguard SP Small |
Humana and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Vanguard
The main advantage of trading using opposite Humana and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard Russell 2000 | Vanguard vs. Vanguard SP Small Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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