Correlation Between Agilon Health and Humana

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

Diversification Opportunities for Agilon Health and Humana

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Agilon and Humana is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding agilon health and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Agilon Health 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 agilon health 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 Agilon Health i.e., Agilon Health and Humana go up and down completely randomly.

Pair Corralation between Agilon Health and Humana

Considering the 90-day investment horizon agilon health is expected to under-perform the Humana. In addition to that, Agilon Health is 2.45 times more volatile than Humana Inc. It trades about -0.05 of its total potential returns per unit of risk. Humana Inc is currently generating about -0.08 per unit of volatility. If you would invest  34,546  in Humana Inc on September 10, 2024 and sell it today you would lose (6,373) from holding Humana Inc or give up 18.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

agilon health  vs.  Humana Inc

 Performance 
       Timeline  
agilon health 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days agilon health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Agilon Health and Humana Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilon Health and Humana

The main advantage of trading using opposite Agilon Health and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilon Health 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 agilon health 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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