Correlation Between Humana and Centene Corp
Can any of the company-specific risk be diversified away by investing in both Humana and Centene Corp 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 Centene Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humana Inc and Centene Corp, you can compare the effects of market volatilities on Humana and Centene Corp 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 Centene Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Centene Corp.
Diversification Opportunities for Humana and Centene Corp
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Humana and Centene is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene Corp 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 Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of Humana i.e., Humana and Centene Corp go up and down completely randomly.
Pair Corralation between Humana and Centene Corp
Considering the 90-day investment horizon Humana Inc is expected to under-perform the Centene Corp. In addition to that, Humana is 1.67 times more volatile than Centene Corp. It trades about -0.08 of its total potential returns per unit of risk. Centene Corp is currently generating about -0.13 per unit of volatility. If you would invest 7,788 in Centene Corp on January 20, 2024 and sell it today you would lose (413.00) from holding Centene Corp or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humana Inc vs. Centene Corp
Performance |
| Timeline |
| Humana Inc |
| Centene Corp |
Humana and Centene Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humana and Centene Corp
The main advantage of trading using opposite Humana and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Centene Corp 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 Centene Corp will offset losses from the drop in Centene Corp's long position.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
| Centene Corp vs. Certara | Centene Corp vs. HealthStream | Centene Corp vs. HealthEquity | Centene Corp vs. Evolent Health |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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