Correlation Between HUMANA and CreditRiskMonitorCom

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

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

Diversification Opportunities for HUMANA and CreditRiskMonitorCom

-0.37

Correlation Coefficient

HUMANA  CreditRiskMonitorCom

Very good diversification

The 3 months correlation between HUMANA and CreditRiskMonitorCom is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and CreditRiskMonitorCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CreditRiskMonitorCom 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 CreditRiskMonitorCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CreditRiskMonitorCom has no effect on the direction of HUMANA i.e., HUMANA and CreditRiskMonitorCom go up and down completely randomly.

Pair Corralation between HUMANA and CreditRiskMonitorCom

Assuming the 90 days trading horizon HUMANA INC is expected to generate 32.36 times more return on investment than CreditRiskMonitorCom. However, HUMANA is 32.36 times more volatile than CreditRiskMonitorCom. It trades about 0.07 of its potential returns per unit of risk. CreditRiskMonitorCom is currently generating about 0.03 per unit of risk. If you would invest  7,862  in HUMANA INC on September 19, 2024 and sell it today you would lose (167.00) from holding HUMANA INC or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.15%
Values	Daily Returns

HUMANA INC  vs.  CreditRiskMonitorCom

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.

CreditRiskMonitorCom

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CreditRiskMonitorCom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, CreditRiskMonitorCom showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and CreditRiskMonitorCom

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

The idea behind HUMANA INC and CreditRiskMonitorCom 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .