Correlation Between Vanguard Global and HUMANA

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

By analyzing existing cross correlation between Vanguard Global Ex Us and HUMANA INC, you can compare the effects of market volatilities on Vanguard Global and HUMANA 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 Vanguard Global with a short position of HUMANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and HUMANA.

Diversification Opportunities for Vanguard Global and HUMANA

0.58

Correlation Coefficient

Vanguard Global  HUMANA

Very weak diversification

The 3 months correlation between Vanguard and HUMANA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Ex Us and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Vanguard Global 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 Vanguard Global Ex Us are associated (or correlated) with HUMANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUMANA INC has no effect on the direction of Vanguard Global i.e., Vanguard Global and HUMANA go up and down completely randomly.

Pair Corralation between Vanguard Global and HUMANA

Assuming the 90 days horizon Vanguard Global Ex Us is expected to under-perform the HUMANA. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Global Ex Us is 90.12 times less risky than HUMANA. The mutual fund trades about -0.01 of its potential returns per unit of risk. The HUMANA INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,175  in HUMANA INC on October 9, 2024 and sell it today you would earn a total of  269.00  from holding HUMANA INC or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.75%
Values	Daily Returns

Vanguard Global Ex Us  vs.  HUMANA INC

Vanguard Global Ex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Global Ex Us has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

HUMANA INC

Risk-Adjusted Performance

4 of 100

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.

Pair Trading with Vanguard Global and HUMANA

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

The idea behind Vanguard Global Ex Us and HUMANA INC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.