Correlation Between HUMANA and Inflation-adjusted

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

By analyzing existing cross correlation between HUMANA INC and Inflation Adjusted Bond Fund, you can compare the effects of market volatilities on HUMANA and Inflation-adjusted 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 Inflation-adjusted. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Inflation-adjusted.

Diversification Opportunities for HUMANA and Inflation-adjusted

0.65

Correlation Coefficient

HUMANA  Inflation-adjusted

Poor diversification

The 3 months correlation between HUMANA and Inflation-adjusted is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Inflation Adjusted Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Adjusted Bond 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 Inflation-adjusted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Adjusted Bond has no effect on the direction of HUMANA i.e., HUMANA and Inflation-adjusted go up and down completely randomly.

Pair Corralation between HUMANA and Inflation-adjusted

Assuming the 90 days trading horizon HUMANA INC is expected to generate 2.51 times more return on investment than Inflation-adjusted. However, HUMANA is 2.51 times more volatile than Inflation Adjusted Bond Fund. It trades about 0.12 of its potential returns per unit of risk. Inflation Adjusted Bond Fund is currently generating about -0.17 per unit of risk. If you would invest  8,071  in HUMANA INC on October 7, 2024 and sell it today you would earn a total of  373.00  from holding HUMANA INC or generate 4.62% return on investment over 90 days.

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

HUMANA INC  vs.  Inflation Adjusted Bond Fund

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.

Inflation Adjusted Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inflation Adjusted Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inflation-adjusted is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Inflation-adjusted

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

The idea behind HUMANA INC and Inflation Adjusted Bond Fund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.