Correlation Between HUMANA and BNY Mellon

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

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

Diversification Opportunities for HUMANA and BNY Mellon

0.61

Correlation Coefficient

HUMANA  BNY Mellon

Poor diversification

The 3 months correlation between HUMANA and BNY is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and BNY Mellon ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon ETF 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon ETF has no effect on the direction of HUMANA i.e., HUMANA and BNY Mellon go up and down completely randomly.

Pair Corralation between HUMANA and BNY Mellon

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the BNY Mellon. In addition to that, HUMANA is 1.11 times more volatile than BNY Mellon ETF. It trades about -0.06 of its total potential returns per unit of risk. BNY Mellon ETF is currently generating about -0.05 per unit of volatility. If you would invest  2,635  in BNY Mellon ETF on December 2, 2024 and sell it today you would lose (64.00) from holding BNY Mellon ETF or give up 2.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

HUMANA INC  vs.  BNY Mellon ETF

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.

BNY Mellon ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNY Mellon ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, BNY Mellon is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HUMANA and BNY Mellon

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

The idea behind HUMANA INC and BNY Mellon ETF 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.