Correlation Between HUMANA and CMG Holdings

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

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

Diversification Opportunities for HUMANA and CMG Holdings

0.29

Correlation Coefficient

HUMANA  CMG Holdings

Modest diversification

The 3 months correlation between HUMANA and CMG is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings Group 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 CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of HUMANA i.e., HUMANA and CMG Holdings go up and down completely randomly.

Pair Corralation between HUMANA and CMG Holdings

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the CMG Holdings. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 10.88 times less risky than CMG Holdings. The bond trades about -0.21 of its potential returns per unit of risk. The CMG Holdings Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.21  in CMG Holdings Group on September 17, 2024 and sell it today you would lose (0.03) from holding CMG Holdings Group or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

HUMANA INC  vs.  CMG Holdings Group

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 uncertain 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.

CMG Holdings Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Holdings Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, CMG Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HUMANA and CMG Holdings

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

The idea behind HUMANA INC and CMG Holdings Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.