Correlation Between Pgim Securitized and HUMANA

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

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

Diversification Opportunities for Pgim Securitized and HUMANA

-0.58

Correlation Coefficient

Pgim Securitized  HUMANA

Excellent diversification

The 3 months correlation between Pgim and HUMANA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Securitized Credit and HUMANA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUMANA INC and Pgim Securitized 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 Pgim Securitized Credit 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 Pgim Securitized i.e., Pgim Securitized and HUMANA go up and down completely randomly.

Pair Corralation between Pgim Securitized and HUMANA

Assuming the 90 days horizon Pgim Securitized Credit is not expected to generate positive returns. However, Pgim Securitized Credit is 44.7 times less risky than HUMANA. It waists most of its returns potential to compensate for thr risk taken. HUMANA is generating about 0.08 per unit of risk. If you would invest  8,257  in HUMANA INC on October 5, 2024 and sell it today you would earn a total of  187.00  from holding HUMANA INC or generate 2.26% return on investment over 90 days.

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

Pgim Securitized Credit  vs.  HUMANA INC

Pgim Securitized Credit

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Securitized Credit are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Securitized 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pgim Securitized and HUMANA

The main advantage of trading using opposite Pgim Securitized and HUMANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim Securitized 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 Pgim Securitized Credit 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.