Correlation Between IDEXX Laboratories and Humana

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Can any of the company-specific risk be diversified away by investing in both IDEXX Laboratories 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 IDEXX Laboratories and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEXX Laboratories and Humana Inc, you can compare the effects of market volatilities on IDEXX Laboratories 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 IDEXX Laboratories with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEXX Laboratories and Humana.

Diversification Opportunities for IDEXX Laboratories and Humana

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between IDEXX and Humana is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and IDEXX Laboratories 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 IDEXX Laboratories 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 IDEXX Laboratories i.e., IDEXX Laboratories and Humana go up and down completely randomly.

Pair Corralation between IDEXX Laboratories and Humana

Assuming the 90 days trading horizon IDEXX Laboratories is expected to generate 0.47 times more return on investment than Humana. However, IDEXX Laboratories is 2.14 times less risky than Humana. It trades about 0.08 of its potential returns per unit of risk. Humana Inc is currently generating about -0.2 per unit of risk. If you would invest  42,107  in IDEXX Laboratories on September 18, 2024 and sell it today you would earn a total of  1,037  from holding IDEXX Laboratories or generate 2.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

IDEXX Laboratories  vs.  Humana Inc

 Performance 
       Timeline  
IDEXX Laboratories 

Risk-Adjusted Performance

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Over the last 90 days IDEXX Laboratories 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.
Humana Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

IDEXX Laboratories and Humana Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IDEXX Laboratories and Humana

The main advantage of trading using opposite IDEXX Laboratories and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEXX Laboratories 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 IDEXX Laboratories 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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