Correlation Between HUMANA and American Leisure

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

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

Diversification Opportunities for HUMANA and American Leisure

-0.02

Correlation Coefficient

HUMANA  American Leisure

Good diversification

The 3 months correlation between HUMANA and American is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and American Leisure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Leisure Holdings 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 American Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Leisure Holdings has no effect on the direction of HUMANA i.e., HUMANA and American Leisure go up and down completely randomly.

Pair Corralation between HUMANA and American Leisure

Assuming the 90 days trading horizon HUMANA is expected to generate 1.01 times less return on investment than American Leisure. In addition to that, HUMANA is 2.07 times more volatile than American Leisure Holdings. It trades about 0.07 of its total potential returns per unit of risk. American Leisure Holdings is currently generating about 0.15 per unit of volatility. If you would invest  0.03  in American Leisure Holdings on October 5, 2024 and sell it today you would lose (0.02) from holding American Leisure Holdings or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.34%
Values	Daily Returns

HUMANA INC  vs.  American Leisure Holdings

HUMANA INC

Risk-Adjusted Performance

4 of 100

Very Weak

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.

American Leisure Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and American Leisure

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

The idea behind HUMANA INC and American Leisure Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.