Correlation Between HUMANA and Valic Company

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

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

Diversification Opportunities for HUMANA and Valic Company

0.33

Correlation Coefficient

HUMANA  Valic Company

Weak diversification

The 3 months correlation between HUMANA and Valic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I 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 Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of HUMANA i.e., HUMANA and Valic Company go up and down completely randomly.

Pair Corralation between HUMANA and Valic Company

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Valic Company. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 2.17 times less risky than Valic Company. The bond trades about -0.07 of its potential returns per unit of risk. The Valic Company I is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,280  in Valic Company I on October 4, 2024 and sell it today you would lose (4.00) from holding Valic Company I or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

HUMANA INC  vs.  Valic Company I

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 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.

Valic Company I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valic Company I has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Valic Company 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 Valic Company

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

The idea behind HUMANA INC and Valic Company I 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.