Correlation Between Humana and Cencora
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
Weak diversification
The 3 months correlation between Humana and Cencora is 0.3. 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 2.64 times more volatile than Cencora. It trades about -0.09 of its total potential returns per unit of risk. Cencora is currently generating about 0.08 per unit of volatility. If you would invest 23,444 in Cencora on September 6, 2024 and sell it today you would earn a total of 1,390 from holding Cencora or generate 5.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Humana Inc vs. Cencora
Performance |
Timeline |
Humana Inc |
Cencora |
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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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