Correlation Between HUMANA and Litman Gregory

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

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

Diversification Opportunities for HUMANA and Litman Gregory

-0.53

Correlation Coefficient

HUMANA  Litman Gregory

Excellent diversification

The 3 months correlation between HUMANA and Litman is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Litman Gregory Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Funds 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 Litman Gregory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litman Gregory Funds has no effect on the direction of HUMANA i.e., HUMANA and Litman Gregory go up and down completely randomly.

Pair Corralation between HUMANA and Litman Gregory

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Litman Gregory. In addition to that, HUMANA is 1.35 times more volatile than Litman Gregory Funds. It trades about -0.18 of its total potential returns per unit of risk. Litman Gregory Funds is currently generating about 0.13 per unit of volatility. If you would invest  1,140  in Litman Gregory Funds on September 12, 2024 and sell it today you would earn a total of  57.00  from holding Litman Gregory Funds or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

HUMANA INC  vs.  Litman Gregory Funds

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Litman Gregory Funds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Litman Gregory Funds are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Litman Gregory is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Litman Gregory

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

The idea behind HUMANA INC and Litman Gregory Funds 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.