Correlation Between IDEXX Laboratories and Humana
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
IDEXX Laboratories vs. Humana Inc
Performance |
Timeline |
IDEXX Laboratories |
Humana Inc |
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.IDEXX Laboratories vs. Samsung Electronics Co | IDEXX Laboratories vs. Samsung Electronics Co | IDEXX Laboratories vs. Hyundai Motor | IDEXX Laboratories vs. Reliance Industries Ltd |
Humana vs. Samsung Electronics Co | Humana vs. Samsung Electronics Co | Humana vs. Hyundai Motor | Humana vs. Reliance Industries Ltd |
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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