Correlation Between IDEXX Laboratories and Humana

Can any of the company-specific risk be diversified away by investing in both IDEXX Laboratories 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 IDEXX Laboratories and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IDEXX Laboratories and Humana Inc, you can compare the effects of market volatilities on IDEXX Laboratories 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 IDEXX Laboratories with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEXX Laboratories and Humana.

Diversification Opportunities for IDEXX Laboratories and Humana

-0.11

Correlation Coefficient

IDEXX Laboratories  Humana

Good diversification

The 3 months correlation between IDEXX and Humana is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and IDEXX Laboratories 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 IDEXX Laboratories 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 IDEXX Laboratories i.e., IDEXX Laboratories and Humana go up and down completely randomly.

Pair Corralation between IDEXX Laboratories and Humana

Assuming the 90 days trading horizon IDEXX Laboratories is expected to generate 3.43 times less return on investment than Humana. But when comparing it to its historical volatility, IDEXX Laboratories is 1.18 times less risky than Humana. It trades about 0.02 of its potential returns per unit of risk. Humana Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25,318  in Humana Inc on December 30, 2024 and sell it today you would earn a total of  1,441  from holding Humana Inc or generate 5.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IDEXX Laboratories  vs.  Humana Inc

IDEXX Laboratories

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IDEXX Laboratories are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IDEXX Laboratories is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Humana Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humana Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Humana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IDEXX Laboratories and Humana

The main advantage of trading using opposite IDEXX Laboratories and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEXX Laboratories 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.

The idea behind IDEXX Laboratories and Humana Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.