Correlation Between HUMANA and Monitor Ventures

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

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

Diversification Opportunities for HUMANA and Monitor Ventures

-0.03

Correlation Coefficient

HUMANA  Monitor Ventures

Good diversification

The 3 months correlation between HUMANA and Monitor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Monitor Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monitor Ventures 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 Monitor Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monitor Ventures has no effect on the direction of HUMANA i.e., HUMANA and Monitor Ventures go up and down completely randomly.

Pair Corralation between HUMANA and Monitor Ventures

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.4 times more return on investment than Monitor Ventures. However, HUMANA INC is 2.52 times less risky than Monitor Ventures. It trades about -0.02 of its potential returns per unit of risk. Monitor Ventures is currently generating about -0.15 per unit of risk. If you would invest  7,970  in HUMANA INC on December 2, 2024 and sell it today you would lose (71.00) from holding HUMANA INC or give up 0.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

HUMANA INC  vs.  Monitor Ventures

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.

Monitor Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monitor Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HUMANA and Monitor Ventures

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

The idea behind HUMANA INC and Monitor Ventures 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.