Correlation Between Laboratory and Humana

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

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

Diversification Opportunities for Laboratory and Humana

0.81

Correlation Coefficient

Laboratory  Humana

Very poor diversification

The 3 months correlation between Laboratory and Humana is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Laboratory 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 Laboratory of 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 Laboratory i.e., Laboratory and Humana go up and down completely randomly.

Pair Corralation between Laboratory and Humana

Allowing for the 90-day total investment horizon Laboratory of is expected to under-perform the Humana. But the stock apears to be less risky and, when comparing its historical volatility, Laboratory of is 1.07 times less risky than Humana. The stock trades about -0.16 of its potential returns per unit of risk. The Humana Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  30,433  in Humana Inc on February 2, 2024 and sell it today you would earn a total of  988.00  from holding Humana Inc or generate 3.25% return on investment over 90 days.

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

Laboratory of  vs.  Humana Inc

Laboratory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laboratory of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 June 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Laboratory and Humana

The main advantage of trading using opposite Laboratory and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory 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 Laboratory of 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.