Correlation Between HUMANA and Transamerica Mlp

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

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

Diversification Opportunities for HUMANA and Transamerica Mlp

-0.25

Correlation Coefficient

HUMANA  Transamerica Mlp

Very good diversification

The 3 months correlation between HUMANA and Transamerica is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Transamerica Mlp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Mlp Energy 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 Transamerica Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Mlp Energy has no effect on the direction of HUMANA i.e., HUMANA and Transamerica Mlp go up and down completely randomly.

Pair Corralation between HUMANA and Transamerica Mlp

Assuming the 90 days trading horizon HUMANA is expected to generate 9.46 times less return on investment than Transamerica Mlp. In addition to that, HUMANA is 1.76 times more volatile than Transamerica Mlp Energy. It trades about 0.01 of its total potential returns per unit of risk. Transamerica Mlp Energy is currently generating about 0.21 per unit of volatility. If you would invest  668.00  in Transamerica Mlp Energy on February 28, 2024 and sell it today you would earn a total of  61.00  from holding Transamerica Mlp Energy or generate 9.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

HUMANA INC  vs.  Transamerica Mlp Energy

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Transamerica Mlp Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Mlp Energy are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Transamerica Mlp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with HUMANA and Transamerica Mlp

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

The idea behind HUMANA INC and Transamerica Mlp Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.