Correlation Between Humana and VanEck Vectors

Can any of the company-specific risk be diversified away by investing in both Humana and VanEck Vectors 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 Vectors 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 Vectors ETF, you can compare the effects of market volatilities on Humana and VanEck Vectors 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 Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and VanEck Vectors.

Diversification Opportunities for Humana and VanEck Vectors

0.25

Correlation Coefficient

Humana  VanEck Vectors

Modest diversification

The 3 months correlation between Humana and VanEck is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF 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 Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Humana i.e., Humana and VanEck Vectors go up and down completely randomly.

Pair Corralation between Humana and VanEck Vectors

Considering the 90-day investment horizon Humana Inc is expected to generate 2.55 times more return on investment than VanEck Vectors. However, Humana is 2.55 times more volatile than VanEck Vectors ETF. It trades about 0.43 of its potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.31 per unit of risk. If you would invest  23,496  in Humana Inc on October 20, 2024 and sell it today you would earn a total of  4,767  from holding Humana Inc or generate 20.29% 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.  VanEck Vectors ETF

Humana Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Humana Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Humana may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VanEck Vectors ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Vectors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Humana and VanEck Vectors

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

The idea behind Humana Inc and VanEck Vectors ETF 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.