Question

a) the question is how can i get the weekly share price??

Collect the weekly share price data(adjusted close) of these companies:

- Humana Inc (HUM)

- Lennar Corporation Class A (LEN)

And collect the price data for the S&P500 market index for the period of one year.

Calculate the weekly returns and graph the returns of the share prices and the index over the period(assume no dividends). Interpret the graph.

Hint: Download data from Yahoo. Finance and do calculations in Excel file. them cope and paste in word file)

b) Are there any market or industry specific factors that you think explain the share price movement of these companies over the period of one year.

c) Calculate the average weekly returns and the standards deviation of the companies and the index over the last year. which of the companies has higher risk? which factors specific to that company might explain the fact that the company has higher risk?

Answer 1

a.   Download the weekly price data for Humana Inc (HUM), Lennar Corporation Class A (LEN) and S&P500 (^GSPC) from Yahoo Finance for last one year. Consider Adj Close data for calculating weekly return.

The average weekly return for HUM, LEN and S&P500 remained in the range of -10% and +10% between May 2019 to Feb 2020, however the volatility in the stock prices and S&P500 index increased substantially in the recent months between Feb 2020 and May 2020 on account of increased uncertainty due to spread of the pandemic COVID-19 and lockdown measures adopted by major economies across the world to contain the spread of the virus and mitigate the damages due to pandemic.

b.   The spread of COVID-19 pandemic in the recent months might have played a crucial role in the rally in Humana Inc (HUM) share price as the company is in the health insurance sector and demand for health insurance have increased substantially due to increased health risk due to coronavirus outbreak in the US. Humana Inc (HUM) share price have moved up 72.5% between Marc 16 and May 19 and the company’s share price has registered an increase of 52.0% in past one year. Lennar Corporation share price has registered an increase of 14.2% over the period of one year. Business prospects of real estate and construction sector as well as general uncertainty of the market in the aftermath of the pandemic influence the share price movement of these companies over the period of one year.
c.  
Average weekly returns
Humana Inc (HUM): 1.1%
Lennar Corporation Class A (LEN): 0.7%
S&P500 (^GSPC): 0.2%
Standards deviation over the last year
Humana Inc (HUM): 7.8%
Lennar Corporation Class A (LEN): 9.2%
S&P500 (^GSPC): 4.0%
Lennar Corporation has higher risk as the standard deviation in weekly return of last one year for Lennar Corporation is higher than Humana Inc;
Following factors specific to Lenmar Corporation might explain the fact that the company has higher risk
Risk associated with the real estate and construction sector
The capital structure and leverage of the company