Correlation Between HUMANA and Simplify Macro

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Can any of the company-specific risk be diversified away by investing in both HUMANA and Simplify Macro 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 Simplify Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HUMANA INC and Simplify Macro Strategy, you can compare the effects of market volatilities on HUMANA and Simplify Macro 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 Simplify Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Simplify Macro.

Diversification Opportunities for HUMANA and Simplify Macro

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between HUMANA and Simplify is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Simplify Macro Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Macro Strategy 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 Simplify Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Macro Strategy has no effect on the direction of HUMANA i.e., HUMANA and Simplify Macro go up and down completely randomly.

Pair Corralation between HUMANA and Simplify Macro

Assuming the 90 days trading horizon HUMANA INC is expected to generate 127.78 times more return on investment than Simplify Macro. However, HUMANA is 127.78 times more volatile than Simplify Macro Strategy. It trades about 0.07 of its potential returns per unit of risk. Simplify Macro Strategy is currently generating about 0.0 per unit of risk. If you would invest  8,350  in HUMANA INC on January 15, 2024 and sell it today you would earn a total of  62.00  from holding HUMANA INC or generate 0.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy93.96%
ValuesDaily Returns

HUMANA INC  vs.  Simplify Macro Strategy

 Performance 
       Timeline  
HUMANA INC 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
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. 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.
Simplify Macro Strategy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Simplify Macro Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Simplify Macro is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

HUMANA and Simplify Macro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Simplify Macro

The main advantage of trading using opposite HUMANA and Simplify Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Simplify Macro 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 Simplify Macro will offset losses from the drop in Simplify Macro's long position.
The idea behind HUMANA INC and Simplify Macro Strategy 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 the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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