Correlation Between Wheaton Precious and Humana

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

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

Diversification Opportunities for Wheaton Precious and Humana

-0.42

Correlation Coefficient

Wheaton Precious  Humana

Very good diversification

The 3 months correlation between Wheaton and Humana is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Humana go up and down completely randomly.

Pair Corralation between Wheaton Precious and Humana

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 0.68 times more return on investment than Humana. However, Wheaton Precious Metals is 1.46 times less risky than Humana. It trades about 0.05 of its potential returns per unit of risk. Humana Inc is currently generating about -0.09 per unit of risk. If you would invest  459,030  in Wheaton Precious Metals on September 4, 2024 and sell it today you would earn a total of  25,970  from holding Wheaton Precious Metals or generate 5.66% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Humana Inc

Wheaton Precious Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 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.

Pair Trading with Wheaton Precious and Humana

The main advantage of trading using opposite Wheaton Precious and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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 Wheaton Precious Metals 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.