Correlation Between Lord Abbett and HUMANA

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

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

Diversification Opportunities for Lord Abbett and HUMANA

-0.75

Correlation Coefficient

Lord Abbett  HUMANA

Pay attention - limited upside

The 3 months correlation between Lord and HUMANA is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inv and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Lord Abbett 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 Lord Abbett Inv 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 Lord Abbett i.e., Lord Abbett and HUMANA go up and down completely randomly.

Pair Corralation between Lord Abbett and HUMANA

Assuming the 90 days horizon Lord Abbett Inv is expected to generate 0.16 times more return on investment than HUMANA. However, Lord Abbett Inv is 6.15 times less risky than HUMANA. It trades about 0.28 of its potential returns per unit of risk. HUMANA INC is currently generating about -0.15 per unit of risk. If you would invest  800.00  in Lord Abbett Inv on August 30, 2024 and sell it today you would earn a total of  19.00  from holding Lord Abbett Inv or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Lord Abbett Inv  vs.  HUMANA INC

Lord Abbett Inv

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Inv are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating 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 Lord Abbett and HUMANA

The main advantage of trading using opposite Lord Abbett and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett 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 Lord Abbett Inv 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 Anywhere module to track or share privately all of your investments from the convenience of any device.