Correlation Between Blackrock Developed and HUMANA

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

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

Diversification Opportunities for Blackrock Developed and HUMANA

0.79

Correlation Coefficient

Blackrock Developed  HUMANA

Poor diversification

The 3 months correlation between Blackrock and HUMANA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Developed Real and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Blackrock Developed 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 Blackrock Developed Real 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 Blackrock Developed i.e., Blackrock Developed and HUMANA go up and down completely randomly.

Pair Corralation between Blackrock Developed and HUMANA

Assuming the 90 days horizon Blackrock Developed Real is expected to generate 0.87 times more return on investment than HUMANA. However, Blackrock Developed Real is 1.14 times less risky than HUMANA. It trades about 0.15 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.02 per unit of risk. If you would invest  787.00  in Blackrock Developed Real on December 2, 2024 and sell it today you would earn a total of  38.00  from holding Blackrock Developed Real or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Blackrock Developed Real  vs.  HUMANA INC

Blackrock Developed Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Developed Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Blackrock Developed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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

Pair Trading with Blackrock Developed and HUMANA

The main advantage of trading using opposite Blackrock Developed and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Developed 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 Blackrock Developed Real 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.