Correlation Between Molina Healthcare and Humana
Can any of the company-specific risk be diversified away by investing in both Molina Healthcare 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 Molina Healthcare and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molina Healthcare and Humana Inc, you can compare the effects of market volatilities on Molina Healthcare 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 Molina Healthcare with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and Humana.
Diversification Opportunities for Molina Healthcare and Humana
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Molina and Humana is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare i.e., Molina Healthcare and Humana go up and down completely randomly.
Pair Corralation between Molina Healthcare and Humana
Considering the 90-day investment horizon Molina Healthcare is expected to under-perform the Humana. But the stock apears to be less risky and, when comparing its historical volatility, Molina Healthcare is 1.84 times less risky than Humana. The stock trades about -0.34 of its potential returns per unit of risk. The Humana Inc is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 34,750 in Humana Inc on January 26, 2024 and sell it today you would lose (3,152) from holding Humana Inc or give up 9.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molina Healthcare vs. Humana Inc
Performance |
| Timeline |
| Molina Healthcare |
| Humana Inc |
Molina Healthcare and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molina Healthcare and Humana
The main advantage of trading using opposite Molina Healthcare and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare 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 Molina Healthcare 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.| Humana vs. Elevance Health | Humana vs. Centene Corp | Humana vs. UnitedHealth Group Incorporated | Humana vs. CVS Health Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |