Correlation Between HUMANA and Vanguard Target

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

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

Diversification Opportunities for HUMANA and Vanguard Target

-0.47

Correlation Coefficient

HUMANA  Vanguard Target

Very good diversification

The 3 months correlation between HUMANA and Vanguard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Vanguard Target Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Target Reti 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 Vanguard Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Target Reti has no effect on the direction of HUMANA i.e., HUMANA and Vanguard Target go up and down completely randomly.

Pair Corralation between HUMANA and Vanguard Target

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Vanguard Target. In addition to that, HUMANA is 1.51 times more volatile than Vanguard Target Retirement. It trades about -0.18 of its total potential returns per unit of risk. Vanguard Target Retirement is currently generating about 0.15 per unit of volatility. If you would invest  5,007  in Vanguard Target Retirement on September 12, 2024 and sell it today you would earn a total of  267.00  from holding Vanguard Target Retirement or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

HUMANA INC  vs.  Vanguard Target Retirement

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 weak 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.

Vanguard Target Reti

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Target Retirement are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vanguard Target is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Vanguard Target

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

The idea behind HUMANA INC and Vanguard Target Retirement 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.