Correlation Between Ampleforth and HUMANA

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

Diversification Opportunities for Ampleforth and HUMANA

AmpleforthHUMANADiversified AwayAmpleforthHUMANADiversified Away100%
-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ampleforth and HUMANA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Ampleforth 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 Ampleforth 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 Ampleforth i.e., Ampleforth and HUMANA go up and down completely randomly.

Pair Corralation between Ampleforth and HUMANA

Assuming the 90 days trading horizon Ampleforth is expected to generate 7.93 times more return on investment than HUMANA. However, Ampleforth is 7.93 times more volatile than HUMANA INC. It trades about 0.07 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.19 per unit of risk. If you would invest  111.00  in Ampleforth on September 14, 2024 and sell it today you would earn a total of  16.00  from holding Ampleforth or generate 14.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.31%
ValuesDaily Returns

Ampleforth  vs.  HUMANA INC

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -100102030
JavaScript chart by amCharts 3.21.15AMPL 444859BR2
       Timeline  
Ampleforth 

Risk-Adjusted Performance

5 of 100

 
Weak
 
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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.11.21.31.41.51.61.7
HUMANA INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.
JavaScript chart by amCharts 3.21.15242331234023272340237678808284

Ampleforth and HUMANA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-20.46-15.32-10.19-5.05-0.044.9810.2315.4720.7125.96 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15AMPL 444859BR2
       Returns  

Pair Trading with Ampleforth and HUMANA

The main advantage of trading using opposite Ampleforth and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampleforth 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 Ampleforth 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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