Correlation Between HUMANA and Arcadis NV

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

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

Diversification Opportunities for HUMANA and Arcadis NV

0.15

Correlation Coefficient

HUMANA  Arcadis NV

Average diversification

The 3 months correlation between HUMANA and Arcadis is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Arcadis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadis NV 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 Arcadis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadis NV has no effect on the direction of HUMANA i.e., HUMANA and Arcadis NV go up and down completely randomly.

Pair Corralation between HUMANA and Arcadis NV

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.41 times more return on investment than Arcadis NV. However, HUMANA INC is 2.47 times less risky than Arcadis NV. It trades about -0.08 of its potential returns per unit of risk. Arcadis NV is currently generating about -0.24 per unit of risk. If you would invest  8,257  in HUMANA INC on December 4, 2024 and sell it today you would lose (358.00) from holding HUMANA INC or give up 4.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.85%
Values	Daily Returns

HUMANA INC  vs.  Arcadis NV

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Arcadis NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcadis NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HUMANA and Arcadis NV

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

The idea behind HUMANA INC and Arcadis NV 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.