Correlation Between HUMANA and Pacer BlueStar

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

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

Diversification Opportunities for HUMANA and Pacer BlueStar

-0.25

Correlation Coefficient

HUMANA  Pacer BlueStar

Very good diversification

The 3 months correlation between HUMANA and Pacer is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Pacer BlueStar Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer BlueStar Engin 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 Pacer BlueStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer BlueStar Engin has no effect on the direction of HUMANA i.e., HUMANA and Pacer BlueStar go up and down completely randomly.

Pair Corralation between HUMANA and Pacer BlueStar

Assuming the 90 days trading horizon HUMANA INC is expected to generate 57.19 times more return on investment than Pacer BlueStar. However, HUMANA is 57.19 times more volatile than Pacer BlueStar Engineering. It trades about 0.07 of its potential returns per unit of risk. Pacer BlueStar Engineering is currently generating about 0.02 per unit of risk. If you would invest  8,213  in HUMANA INC on October 24, 2024 and sell it today you would earn a total of  231.00  from holding HUMANA INC or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.94%
Values	Daily Returns

HUMANA INC  vs.  Pacer BlueStar Engineering

HUMANA INC

Risk-Adjusted Performance

4 of 100

Modest

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

Pacer BlueStar Engin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer BlueStar Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal essential indicators, Pacer BlueStar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HUMANA and Pacer BlueStar

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

The idea behind HUMANA INC and Pacer BlueStar Engineering 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.