Correlation Between HUMANA and Canoo Holdings

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

By analyzing existing cross correlation between HUMANA INC and Canoo Holdings, you can compare the effects of market volatilities on HUMANA and Canoo Holdings 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 Canoo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Canoo Holdings.

Diversification Opportunities for HUMANA and Canoo Holdings

0.19

Correlation Coefficient

HUMANA  Canoo Holdings

Average diversification

The 3 months correlation between HUMANA and Canoo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Canoo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Holdings 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 Canoo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Holdings has no effect on the direction of HUMANA i.e., HUMANA and Canoo Holdings go up and down completely randomly.

Pair Corralation between HUMANA and Canoo Holdings

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.03 times more return on investment than Canoo Holdings. However, HUMANA INC is 30.28 times less risky than Canoo Holdings. It trades about 0.05 of its potential returns per unit of risk. Canoo Holdings is currently generating about -0.22 per unit of risk. If you would invest  7,999  in HUMANA INC on December 30, 2024 and sell it today you would earn a total of  198.00  from holding HUMANA INC or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	31.25%
Values	Daily Returns

HUMANA INC  vs.  Canoo Holdings

HUMANA INC

Risk-Adjusted Performance

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. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Canoo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canoo Holdings 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 Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with HUMANA and Canoo Holdings

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

The idea behind HUMANA INC and Canoo Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.