Correlation Between HUMANA and Schwab International

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

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

Diversification Opportunities for HUMANA and Schwab International

0.16

Correlation Coefficient

HUMANA  Schwab International

Average diversification

The 3 months correlation between HUMANA and Schwab is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Schwab International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab International 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 Schwab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of HUMANA i.e., HUMANA and Schwab International go up and down completely randomly.

Pair Corralation between HUMANA and Schwab International

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Schwab International. In addition to that, HUMANA is 1.06 times more volatile than Schwab International Small Cap. It trades about -0.18 of its total potential returns per unit of risk. Schwab International Small Cap is currently generating about -0.04 per unit of volatility. If you would invest  3,745  in Schwab International Small Cap on September 13, 2024 and sell it today you would lose (84.00) from holding Schwab International Small Cap or give up 2.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

HUMANA INC  vs.  Schwab International Small Cap

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. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Schwab International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab International Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Schwab International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HUMANA and Schwab International

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

The idea behind HUMANA INC and Schwab International Small Cap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.