Correlation Between Bright Health and Humana

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

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

Diversification Opportunities for Bright Health and Humana

0.47

Correlation Coefficient

Bright Health  Humana

Very weak diversification

The 3 months correlation between Bright and Humana is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bright Health Group and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Bright Health 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 Bright Health Group 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 Bright Health i.e., Bright Health and Humana go up and down completely randomly.

Pair Corralation between Bright Health and Humana

If you would invest  1,229  in Bright Health Group on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Bright Health Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Bright Health Group  vs.  Humana Inc

Bright Health Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Health Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Bright Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Humana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Bright Health and Humana

The main advantage of trading using opposite Bright Health and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Health 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 Bright Health Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.