Correlation Between Humana and Cencora

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

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

Diversification Opportunities for Humana and Cencora

0.31

Correlation Coefficient

Humana  Cencora

Weak diversification

The 3 months correlation between Humana and Cencora is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Humana i.e., Humana and Cencora go up and down completely randomly.

Pair Corralation between Humana and Cencora

Considering the 90-day investment horizon Humana Inc is expected to generate 2.23 times more return on investment than Cencora. However, Humana is 2.23 times more volatile than Cencora. It trades about 0.21 of its potential returns per unit of risk. Cencora is currently generating about 0.24 per unit of risk. If you would invest  25,555  in Humana Inc on September 5, 2024 and sell it today you would earn a total of  3,558  from holding Humana Inc or generate 13.92% return on investment over 90 days.

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

Humana Inc  vs.  Cencora

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 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.

Cencora

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Cencora is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Humana and Cencora

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

The idea behind Humana Inc and Cencora 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..