Correlation Between Heartland Banccorp and HUMANA

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

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

Diversification Opportunities for Heartland Banccorp and HUMANA

-0.54

Correlation Coefficient

Heartland Banccorp  HUMANA

Excellent diversification

The 3 months correlation between Heartland and HUMANA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Banccorp and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Heartland Banccorp 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 Heartland Banccorp 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 Heartland Banccorp i.e., Heartland Banccorp and HUMANA go up and down completely randomly.

Pair Corralation between Heartland Banccorp and HUMANA

Given the investment horizon of 90 days Heartland Banccorp is expected to generate 2.51 times more return on investment than HUMANA. However, Heartland Banccorp is 2.51 times more volatile than HUMANA INC. It trades about 0.12 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.15 per unit of risk. If you would invest  14,339  in Heartland Banccorp on September 2, 2024 and sell it today you would earn a total of  2,111  from holding Heartland Banccorp or generate 14.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Heartland Banccorp  vs.  HUMANA INC

Heartland Banccorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Banccorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Heartland Banccorp displayed solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC

Risk-Adjusted Performance

0 of 100

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 weak 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.

Pair Trading with Heartland Banccorp and HUMANA

The main advantage of trading using opposite Heartland Banccorp and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Banccorp 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 Heartland Banccorp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.