Can any of the company-specific risk be diversified away by investing in both HUMANA and BlackRock Long 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 BlackRock Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUMANA INC and BlackRock Long Term Municipal, you can compare the effects of market volatilities on HUMANA and BlackRock Long 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 BlackRock Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and BlackRock Long.
Diversification Opportunities for HUMANA and BlackRock Long
The 3 months correlation between HUMANA and BlackRock is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and BlackRock Long Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Long Term 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 BlackRock Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Long Term has no effect on the direction of HUMANA i.e., HUMANA and BlackRock Long go up and down completely randomly.
Pair Corralation between HUMANA and BlackRock Long
Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.89 times more return on investment than BlackRock Long. However, HUMANA INC is 1.12 times less risky than BlackRock Long. It trades about 0.17 of its potential returns per unit of risk. BlackRock Long Term Municipal is currently generating about 0.12 per unit of risk. If you would invest 7,900 in HUMANA INC on March 6, 2024 and sell it today you would earn a total of 196.00 from holding HUMANA INC or generate 2.48% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Over the last 90 days BlackRock Long Term Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BlackRock Long is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.