Correlation Between Humana and VanEck Africa

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

By analyzing existing cross correlation between Humana Inc and VanEck Africa Index, you can compare the effects of market volatilities on Humana and VanEck Africa 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 VanEck Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and VanEck Africa.

Diversification Opportunities for Humana and VanEck Africa

-0.49

Correlation Coefficient

Humana  VanEck Africa

Very good diversification

The 3 months correlation between Humana and VanEck is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and VanEck Africa Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Africa Index 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 VanEck Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Africa Index has no effect on the direction of Humana i.e., Humana and VanEck Africa go up and down completely randomly.

Pair Corralation between Humana and VanEck Africa

Considering the 90-day investment horizon Humana Inc is expected to generate 2.21 times more return on investment than VanEck Africa. However, Humana is 2.21 times more volatile than VanEck Africa Index. It trades about 0.23 of its potential returns per unit of risk. VanEck Africa Index is currently generating about -0.05 per unit of risk. If you would invest  25,555  in Humana Inc on September 4, 2024 and sell it today you would earn a total of  3,758  from holding Humana Inc or generate 14.71% return on investment over 90 days.

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

Humana Inc  vs.  VanEck Africa Index

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.

VanEck Africa Index

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Africa Index are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, VanEck Africa is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Humana and VanEck Africa

The main advantage of trading using opposite Humana and VanEck Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, VanEck Africa 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 VanEck Africa will offset losses from the drop in VanEck Africa's long position.

The idea behind Humana Inc and VanEck Africa Index 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.