Correlation Between Humana and CVS Corp

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Can any of the company-specific risk be diversified away by investing in both Humana and CVS 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 CVS 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 CVS Corp, you can compare the effects of market volatilities on Humana and CVS 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 CVS Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and CVS Corp.

Diversification Opportunities for Humana and CVS Corp

  Correlation Coefficient

Modest diversification

The 3 months correlation between Humana and CVS Corp is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and CVS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS 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 CVS Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Corp has no effect on the direction of Humana i.e., Humana and CVS Corp go up and down completely randomly.

Pair Corralation between Humana and CVS Corp

Considering the 90-day investment horizon Humana is expected to generate 1.84 times less return on investment than CVS Corp. In addition to that, Humana is 1.18 times more volatile than CVS Corp. It trades about 0.03 of its total potential returns per unit of risk. CVS Corp is currently generating about 0.07 per unit of volatility. If you would invest  5,819  in CVS Corp on March 31, 2022 and sell it today you would earn a total of  3,545  from holding CVS Corp or generate 60.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Humana Inc  vs.  CVS Corp

 Performance (%) 
Humana Inc 
Humana Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Humana Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Humana may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
Payout Ratio
Last Split Factor
Forward Annual Dividend Rate
Dividend Date
Ex Dividend Date
Last Split Date

Humana Price Channel

CVS Corp 
CVS Corp Performance
0 of 100
Over the last 90 days CVS Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
Payout Ratio
Last Split Factor
Forward Annual Dividend Rate
Dividend Date
Ex Dividend Date
Last Split Date

CVS Corp Price Channel

Humana and CVS Corp Volatility Contrast

 Predicted Return Density 

Pair Trading with Humana and CVS Corp

The main advantage of trading using opposite Humana and CVS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, CVS 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 CVS Corp will offset losses from the drop in CVS Corp's long position.
The idea behind Humana Inc and CVS Corp 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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