Correlation Between HUMANA and Europac Gold

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

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

Diversification Opportunities for HUMANA and Europac Gold

0.15

Correlation Coefficient

HUMANA  Europac Gold

Average diversification

The 3 months correlation between HUMANA and Europac is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold 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 Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of HUMANA i.e., HUMANA and Europac Gold go up and down completely randomly.

Pair Corralation between HUMANA and Europac Gold

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.46 times more return on investment than Europac Gold. However, HUMANA INC is 2.16 times less risky than Europac Gold. It trades about 0.06 of its potential returns per unit of risk. Europac Gold Fund is currently generating about -0.04 per unit of risk. If you would invest  8,186  in HUMANA INC on October 5, 2024 and sell it today you would earn a total of  258.00  from holding HUMANA INC or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

HUMANA INC  vs.  Europac Gold Fund

HUMANA INC

Risk-Adjusted Performance

4 of 100

Very Weak

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

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Europac Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Europac Gold

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

The idea behind HUMANA INC and Europac Gold Fund 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.

Check out your portfolio center.

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.