Correlation Between Humana and Insight Select

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

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

Diversification Opportunities for Humana and Insight Select

-0.63

Correlation Coefficient

Humana  Insight Select

Excellent diversification

The 3 months correlation between Humana and Insight is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Humana Inc and Insight Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insight Select Income 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 Insight Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insight Select Income has no effect on the direction of Humana i.e., Humana and Insight Select go up and down completely randomly.

Pair Corralation between Humana and Insight Select

Considering the 90-day investment horizon Humana Inc is expected to generate 5.81 times more return on investment than Insight Select. However, Humana is 5.81 times more volatile than Insight Select Income. It trades about 0.21 of its potential returns per unit of risk. Insight Select Income is currently generating about 0.08 per unit of risk. If you would invest  25,555  in Humana Inc on September 5, 2024 and sell it today you would earn a total of  3,558  from holding Humana Inc or generate 13.92% return on investment over 90 days.

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

Humana Inc  vs.  Insight Select Income

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.

Insight Select Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Insight Select Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Insight Select 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 Insight Select

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

The idea behind Humana Inc and Insight Select Income 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..