Correlation Between SoftBank Group and Humana

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

By analyzing existing cross correlation between SoftBank Group Corp and Humana Inc, you can compare the effects of market volatilities on SoftBank Group and Humana 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 SoftBank Group with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Humana.

Diversification Opportunities for SoftBank Group and Humana

0.25

Correlation Coefficient

SoftBank Group  Humana

Modest diversification

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

Pair Corralation between SoftBank Group and Humana

Assuming the 90 days trading horizon SoftBank Group Corp is expected to under-perform the Humana. But the stock apears to be less risky and, when comparing its historical volatility, SoftBank Group Corp is 1.29 times less risky than Humana. The stock trades about -0.19 of its potential returns per unit of risk. The Humana Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  26,131  in Humana Inc on September 1, 2024 and sell it today you would earn a total of  3,668  from holding Humana Inc or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.91%
Values	Daily Returns

SoftBank Group Corp  vs.  Humana Inc

SoftBank Group Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SoftBank Group may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SoftBank Group and Humana

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

The idea behind SoftBank Group Corp and Humana Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.