Correlation Between Humana and Hershey

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

By analyzing existing cross correlation between Humana Inc and Hershey Co, you can compare the effects of market volatilities on Humana and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Hershey.

Diversification Opportunities for Humana and Hershey

0.19

Correlation Coefficient

Humana  Hershey

Average diversification

The 3 months correlation between Humana and Hershey is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Humana i.e., Humana and Hershey go up and down completely randomly.

Pair Corralation between Humana and Hershey

Assuming the 90 days trading horizon Humana Inc is expected to under-perform the Hershey. In addition to that, Humana is 1.65 times more volatile than Hershey Co. It trades about -0.1 of its total potential returns per unit of risk. Hershey Co is currently generating about -0.05 per unit of volatility. If you would invest  19,462  in Hershey Co on September 19, 2024 and sell it today you would lose (1,604) from holding Hershey Co or give up 8.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Humana Inc  vs.  Hershey Co

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hershey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hershey Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Humana and Hershey

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

The idea behind Humana Inc and Hershey Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.