Correlation Between GE Vernova and HUMANA

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

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

Diversification Opportunities for GE Vernova and HUMANA

-0.33

Correlation Coefficient

GE Vernova  HUMANA

Very good diversification

The 3 months correlation between GEV and HUMANA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and HUMANA go up and down completely randomly.

Pair Corralation between GE Vernova and HUMANA

Considering the 90-day investment horizon GE Vernova LLC is expected to under-perform the HUMANA. In addition to that, GE Vernova is 5.9 times more volatile than HUMANA INC. It trades about -0.01 of its total potential returns per unit of risk. HUMANA INC is currently generating about 0.05 per unit of volatility. If you would invest  7,999  in HUMANA INC on December 30, 2024 and sell it today you would earn a total of  198.00  from holding HUMANA INC or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

GE Vernova LLC  vs.  HUMANA INC

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HUMANA INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE Vernova and HUMANA

The main advantage of trading using opposite GE Vernova and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova 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 GE Vernova LLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.