Correlation Between HUMANA and Franklin Convertible
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By analyzing existing cross correlation between HUMANA INC and Franklin Vertible Securities, you can compare the effects of market volatilities on HUMANA and Franklin Convertible 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 Franklin Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Franklin Convertible.
Diversification Opportunities for HUMANA and Franklin Convertible
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between HUMANA and Franklin is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Franklin Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Convertible 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 Franklin Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Convertible has no effect on the direction of HUMANA i.e., HUMANA and Franklin Convertible go up and down completely randomly.
Pair Corralation between HUMANA and Franklin Convertible
Assuming the 90 days trading horizon HUMANA INC is expected to generate 1.65 times more return on investment than Franklin Convertible. However, HUMANA is 1.65 times more volatile than Franklin Vertible Securities. It trades about 0.12 of its potential returns per unit of risk. Franklin Vertible Securities is currently generating about 0.05 per unit of risk. If you would invest 7,927 in HUMANA INC on March 17, 2024 and sell it today you would earn a total of 485.00 from holding HUMANA INC or generate 6.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.88% |
Values | Daily Returns |
HUMANA INC vs. Franklin Vertible Securities
Performance |
Timeline |
HUMANA INC |
Franklin Convertible |
HUMANA and Franklin Convertible Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HUMANA and Franklin Convertible
The main advantage of trading using opposite HUMANA and Franklin Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Franklin Convertible 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 Franklin Convertible will offset losses from the drop in Franklin Convertible's long position.The idea behind HUMANA INC and Franklin Vertible Securities 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.Franklin Convertible vs. Franklin Mutual Beacon | Franklin Convertible vs. Templeton Developing Markets | Franklin Convertible vs. Franklin Mutual Global | Franklin Convertible vs. Franklin Mutual Global |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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