Correlation Between HUMANA and Vanguard Russell

Can any of the company-specific risk be diversified away by investing in both HUMANA and Vanguard Russell 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 Russell 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 Russell 2000, you can compare the effects of market volatilities on HUMANA and Vanguard Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Vanguard Russell.

Diversification Opportunities for HUMANA and Vanguard Russell

-0.45

Correlation Coefficient

HUMANA  Vanguard Russell

Very good diversification

The 3 months correlation between HUMANA and Vanguard is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Vanguard Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 2000 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 2000 has no effect on the direction of HUMANA i.e., HUMANA and Vanguard Russell go up and down completely randomly.

Pair Corralation between HUMANA and Vanguard Russell

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Vanguard Russell. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.5 times less risky than Vanguard Russell. The bond trades about -0.18 of its potential returns per unit of risk. The Vanguard Russell 2000 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8,528  in Vanguard Russell 2000 on September 12, 2024 and sell it today you would earn a total of  1,093  from holding Vanguard Russell 2000 or generate 12.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  Vanguard Russell 2000

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 Russell 2000

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 2000 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HUMANA and Vanguard Russell

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

The idea behind HUMANA INC and Vanguard Russell 2000 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.