Correlation Between Humana and IShares ETF

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

By analyzing existing cross correlation between Humana Inc and iShares ETF Trust, you can compare the effects of market volatilities on Humana and IShares ETF 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 IShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humana and IShares ETF.

Diversification Opportunities for Humana and IShares ETF

-0.58

Correlation Coefficient

Humana  IShares ETF

Excellent diversification

The 3 months correlation between Humana and IShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and iShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ETF Trust 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 IShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ETF Trust has no effect on the direction of Humana i.e., Humana and IShares ETF go up and down completely randomly.

Pair Corralation between Humana and IShares ETF

Considering the 90-day investment horizon Humana Inc is expected to under-perform the IShares ETF. In addition to that, Humana is 15.05 times more volatile than iShares ETF Trust. It trades about -0.09 of its total potential returns per unit of risk. iShares ETF Trust is currently generating about 0.25 per unit of volatility. If you would invest  2,609  in iShares ETF Trust on September 3, 2024 and sell it today you would earn a total of  90.00  from holding iShares ETF Trust or generate 3.45% 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.  iShares ETF Trust

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.

iShares ETF Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ETF Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, IShares ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Humana and IShares ETF

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

The idea behind Humana Inc and iShares ETF Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.