Correlation Between Mill City and HUMANA

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

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

Diversification Opportunities for Mill City and HUMANA

-0.22

Correlation Coefficient

Mill City  HUMANA

Very good diversification

The 3 months correlation between Mill and HUMANA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Mill City 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 Mill City Ventures 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 Mill City i.e., Mill City and HUMANA go up and down completely randomly.

Pair Corralation between Mill City and HUMANA

Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the HUMANA. In addition to that, Mill City is 8.05 times more volatile than HUMANA INC. It trades about -0.16 of its total potential returns per unit of risk. HUMANA INC is currently generating about -0.09 per unit of volatility. If you would invest  8,052  in HUMANA INC on November 27, 2024 and sell it today you would lose (153.00) from holding HUMANA INC or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Mill City Ventures  vs.  HUMANA INC

Mill City Ventures

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mill City unveiled solid returns over the last few months and may actually be approaching a breakup point.

HUMANA INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUMANA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mill City and HUMANA

The main advantage of trading using opposite Mill City and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City 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 Mill City Ventures 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .