Correlation Between Laboratory and Humana
Can any of the company-specific risk be diversified away by investing in both Laboratory and Humana 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 Laboratory and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Humana Inc, you can compare the effects of market volatilities on Laboratory and Humana 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 Laboratory with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Humana.
Diversification Opportunities for Laboratory and Humana
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Laboratory and Humana is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Laboratory 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 Laboratory of are associated (or correlated) with Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Laboratory i.e., Laboratory and Humana go up and down completely randomly.
Pair Corralation between Laboratory and Humana
Allowing for the 90-day total investment horizon Laboratory is expected to generate 2.68 times less return on investment than Humana. But when comparing it to its historical volatility, Laboratory of is 2.59 times less risky than Humana. It trades about 0.23 of its potential returns per unit of risk. Humana Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laboratory of vs. Humana Inc
Performance |
| Timeline |
| Laboratory |
| Humana Inc |
Laboratory and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Humana
The main advantage of trading using opposite Laboratory and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Humana 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 Humana will offset losses from the drop in Humana's long position.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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