Correlation Between Black Diamond and HUMANA

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

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

Diversification Opportunities for Black Diamond and HUMANA

-0.36

Correlation Coefficient

Black Diamond  HUMANA

Very good diversification

The 3 months correlation between Black and HUMANA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Group and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Black Diamond 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 Black Diamond Group 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 Black Diamond i.e., Black Diamond and HUMANA go up and down completely randomly.

Pair Corralation between Black Diamond and HUMANA

Assuming the 90 days horizon Black Diamond Group is expected to under-perform the HUMANA. But the otc stock apears to be less risky and, when comparing its historical volatility, Black Diamond Group is 1.18 times less risky than HUMANA. The otc stock trades about -0.18 of its potential returns per unit of risk. The HUMANA INC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  8,185  in HUMANA INC on December 1, 2024 and sell it today you would lose (286.00) from holding HUMANA INC or give up 3.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Black Diamond Group  vs.  HUMANA INC

Black Diamond Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Diamond Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HUMANA INC

Risk-Adjusted Performance

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Black Diamond and HUMANA

The main advantage of trading using opposite Black Diamond and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond 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 Black Diamond Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.