Correlation Between HUMANA and Eagle Point

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

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

Diversification Opportunities for HUMANA and Eagle Point

-0.26

Correlation Coefficient

HUMANA  Eagle Point

Very good diversification

The 3 months correlation between HUMANA and Eagle is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Eagle Point Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Income 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 Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Income has no effect on the direction of HUMANA i.e., HUMANA and Eagle Point go up and down completely randomly.

Pair Corralation between HUMANA and Eagle Point

Assuming the 90 days trading horizon HUMANA is expected to generate 1.02 times less return on investment than Eagle Point. In addition to that, HUMANA is 2.19 times more volatile than Eagle Point Income. It trades about 0.06 of its total potential returns per unit of risk. Eagle Point Income is currently generating about 0.12 per unit of volatility. If you would invest  2,284  in Eagle Point Income on October 22, 2024 and sell it today you would earn a total of  119.00  from holding Eagle Point Income or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.4%
Values	Daily Returns

HUMANA INC  vs.  Eagle Point Income

HUMANA INC

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 6 (%) 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.

Eagle Point Income

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Eagle Point is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Eagle Point

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

The idea behind HUMANA INC and Eagle Point Income 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.