Correlation Between HUMANA and Quadratic Interest

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

Diversification Opportunities for HUMANA and Quadratic Interest

0.68
  Correlation Coefficient

Poor diversification

The 1 month correlation between HUMANA and Quadratic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Quadratic Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Interest Rate 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 Quadratic Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Interest Rate has no effect on the direction of HUMANA i.e., HUMANA and Quadratic Interest go up and down completely randomly.

Pair Corralation between HUMANA and Quadratic Interest

Assuming the 90 days trading horizon HUMANA is expected to generate 2.41 times less return on investment than Quadratic Interest. But when comparing it to its historical volatility, HUMANA INC is 3.16 times less risky than Quadratic Interest. It trades about 0.26 of its potential returns per unit of risk. Quadratic Interest Rate is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,139  in Quadratic Interest Rate on December 20, 2022 and sell it today you would earn a total of  191.00  from holding Quadratic Interest Rate or generate 8.93% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthSignificant
Accuracy90.0%
ValuesDaily Returns

HUMANA INC  vs.  Quadratic Interest Rate

 Performance (%) 
       Timeline  
HUMANA INC 

HUMANA Performance

19 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HUMANA may actually be approaching a critical reversion point that can send shares even higher in April 2023.
Quadratic Interest Rate 

Quadratic Performance

15 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Quadratic Interest Rate are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Quadratic Interest disclosed solid returns over the last few months and may actually be approaching a breakup point.

HUMANA and Quadratic Interest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HUMANA and Quadratic Interest

The main advantage of trading using opposite HUMANA and Quadratic Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Quadratic Interest 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 Quadratic Interest will offset losses from the drop in Quadratic Interest's long position.
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The idea behind HUMANA INC and Quadratic Interest Rate 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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