Correlation Between Humana and Cencora

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Can any of the company-specific risk be diversified away by investing in both Humana and Cencora 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 Cencora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Cencora, you can compare the effects of market volatilities on Humana and Cencora 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 Cencora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Cencora.

Diversification Opportunities for Humana and Cencora

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Humana and Cencora is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Humana i.e., Humana and Cencora go up and down completely randomly.

Pair Corralation between Humana and Cencora

Considering the 90-day investment horizon Humana Inc is expected to under-perform the Cencora. In addition to that, Humana is 2.52 times more volatile than Cencora. It trades about -0.05 of its total potential returns per unit of risk. Cencora is currently generating about 0.03 per unit of volatility. If you would invest  23,569  in Cencora on September 11, 2024 and sell it today you would earn a total of  482.00  from holding Cencora or generate 2.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Humana Inc  vs.  Cencora

 Performance 
       Timeline  
Humana Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest abnormal performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.
Cencora 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Cencora is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Humana and Cencora Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Humana and Cencora

The main advantage of trading using opposite Humana and Cencora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Cencora 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 Cencora will offset losses from the drop in Cencora's long position.
The idea behind Humana Inc and Cencora 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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