Correlation Between HUMANA and United States

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

By analyzing existing cross correlation between HUMANA INC and United States 12, you can compare the effects of market volatilities on HUMANA and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and United States.

Diversification Opportunities for HUMANA and United States

-0.36

Correlation Coefficient

HUMANA  United States

Very good diversification

The 3 months correlation between HUMANA and United is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of HUMANA i.e., HUMANA and United States go up and down completely randomly.

Pair Corralation between HUMANA and United States

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.94 times more return on investment than United States. However, HUMANA INC is 1.06 times less risky than United States. It trades about 0.08 of its potential returns per unit of risk. United States 12 is currently generating about 0.03 per unit of risk. If you would invest  7,900  in HUMANA INC on March 5, 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.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

HUMANA INC  vs.  United States 12

HUMANA INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 1 (%) 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.

United States 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States 12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, United States is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HUMANA and United States

The main advantage of trading using opposite HUMANA and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.

The idea behind HUMANA INC and United States 12 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 Commodity Directory module to find actively traded commodities issued by global exchanges.