Correlation Between Humana and Ocean Park

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

By analyzing existing cross correlation between Humana Inc and Ocean Park International, you can compare the effects of market volatilities on Humana and Ocean Park 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 Humana with a short position of Ocean Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and Ocean Park.

Diversification Opportunities for Humana and Ocean Park

-0.42

Correlation Coefficient

Humana  Ocean Park

Very good diversification

The 3 months correlation between Humana and Ocean is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Ocean Park International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Park International and Humana 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 Humana Inc are associated (or correlated) with Ocean Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Park International has no effect on the direction of Humana i.e., Humana and Ocean Park go up and down completely randomly.

Pair Corralation between Humana and Ocean Park

Considering the 90-day investment horizon Humana Inc is expected to under-perform the Ocean Park. In addition to that, Humana is 3.76 times more volatile than Ocean Park International. It trades about -0.1 of its total potential returns per unit of risk. Ocean Park International is currently generating about 0.02 per unit of volatility. If you would invest  2,502  in Ocean Park International on September 5, 2024 and sell it today you would earn a total of  22.00  from holding Ocean Park International or generate 0.88% return on investment over 90 days.

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

Humana Inc  vs.  Ocean Park International

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. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Ocean Park International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocean Park International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Humana and Ocean Park

The main advantage of trading using opposite Humana and Ocean Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humana position performs unexpectedly, Ocean Park 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 Ocean Park will offset losses from the drop in Ocean Park's long position.

The idea behind Humana Inc and Ocean Park International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.