Correlation Between Humana and IVH

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

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

Diversification Opportunities for Humana and IVH

-0.39

Correlation Coefficient

Humana  IVH

Very good diversification

The 3 months correlation between Humana and IVH is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and IVH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IVH 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 IVH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IVH has no effect on the direction of Humana i.e., Humana and IVH go up and down completely randomly.

Pair Corralation between Humana and IVH

If you would invest  26,760  in Humana Inc on September 13, 2024 and sell it today you would earn a total of  1,822  from holding Humana Inc or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Humana Inc  vs.  IVH

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 latest abnormal performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

IVH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IVH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IVH is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Humana and IVH

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

The idea behind Humana Inc and IVH 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.