Correlation Between Mativ Holdings and HUMANA

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

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

Diversification Opportunities for Mativ Holdings and HUMANA

0.24

Correlation Coefficient

Mativ Holdings  HUMANA

Modest diversification

The 3 months correlation between Mativ and HUMANA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Mativ Holdings 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 Mativ Holdings 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 Mativ Holdings i.e., Mativ Holdings and HUMANA go up and down completely randomly.

Pair Corralation between Mativ Holdings and HUMANA

Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the HUMANA. In addition to that, Mativ Holdings is 1.37 times more volatile than HUMANA INC. It trades about -0.42 of its total potential returns per unit of risk. HUMANA INC is currently generating about 0.12 per unit of volatility. If you would invest  8,180  in HUMANA INC on October 4, 2024 and sell it today you would earn a total of  264.00  from holding HUMANA INC or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Mativ Holdings  vs.  HUMANA INC

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

HUMANA INC

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mativ Holdings and HUMANA

The main advantage of trading using opposite Mativ Holdings and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings 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 Mativ Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.