Correlation Between Eaton Vance and HUMANA

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

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

Diversification Opportunities for Eaton Vance and HUMANA

-0.16

Correlation Coefficient

Eaton Vance  HUMANA

Good diversification

The 3 months correlation between Eaton and HUMANA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Missouri and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Eaton Vance 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 Eaton Vance Missouri 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 Eaton Vance i.e., Eaton Vance and HUMANA go up and down completely randomly.

Pair Corralation between Eaton Vance and HUMANA

Assuming the 90 days horizon Eaton Vance is expected to generate 46.72 times less return on investment than HUMANA. But when comparing it to its historical volatility, Eaton Vance Missouri is 5.61 times less risky than HUMANA. It trades about 0.03 of its potential returns per unit of risk. HUMANA INC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  7,944  in HUMANA INC on October 22, 2024 and sell it today you would earn a total of  500.00  from holding HUMANA INC or generate 6.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Eaton Vance Missouri  vs.  HUMANA INC

Eaton Vance Missouri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaton Vance Missouri has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance 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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eaton Vance and HUMANA

The main advantage of trading using opposite Eaton Vance and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance 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 Eaton Vance Missouri 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.