Correlation Between HUMANA and Eaton Vance

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

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

Diversification Opportunities for HUMANA and Eaton Vance

0.52

Correlation Coefficient

HUMANA  Eaton Vance

Very weak diversification

The 3 months correlation between HUMANA and Eaton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Eaton Vance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Limited 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Limited has no effect on the direction of HUMANA i.e., HUMANA and Eaton Vance go up and down completely randomly.

Pair Corralation between HUMANA and Eaton Vance

Assuming the 90 days trading horizon HUMANA is expected to generate 1.76 times less return on investment than Eaton Vance. In addition to that, HUMANA is 1.28 times more volatile than Eaton Vance Limited. It trades about 0.05 of its total potential returns per unit of risk. Eaton Vance Limited is currently generating about 0.12 per unit of volatility. If you would invest  961.00  in Eaton Vance Limited on December 30, 2024 and sell it today you would earn a total of  43.00  from holding Eaton Vance Limited or generate 4.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  Eaton Vance Limited

HUMANA INC

Risk-Adjusted Performance

Insignificant

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.

Eaton Vance Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Limited are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HUMANA and Eaton Vance

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

The idea behind HUMANA INC and Eaton Vance Limited 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.