Correlation Between Humana and Las Vegas

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

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

Diversification Opportunities for Humana and Las Vegas

-0.87

Correlation Coefficient

Humana  Las Vegas

Pay attention - limited upside

The 3 months correlation between Humana and Las is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Humana i.e., Humana and Las Vegas go up and down completely randomly.

Pair Corralation between Humana and Las Vegas

Assuming the 90 days trading horizon Humana Inc is expected to under-perform the Las Vegas. In addition to that, Humana is 1.73 times more volatile than Las Vegas Sands. It trades about -0.06 of its total potential returns per unit of risk. Las Vegas Sands is currently generating about 0.23 per unit of volatility. If you would invest  3,901  in Las Vegas Sands on August 31, 2024 and sell it today you would earn a total of  1,229  from holding Las Vegas Sands or generate 31.5% return on investment over 90 days.

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

Humana Inc  vs.  Las Vegas Sands

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Las Vegas Sands

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humana and Las Vegas

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

The idea behind Humana Inc and Las Vegas Sands 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..