Correlation Between HUMANA and Franklin Adjustable

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

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

Diversification Opportunities for HUMANA and Franklin Adjustable

-0.32

Correlation Coefficient

HUMANA  Franklin Adjustable

Very good diversification

The 3 months correlation between HUMANA and Franklin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable 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 Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of HUMANA i.e., HUMANA and Franklin Adjustable go up and down completely randomly.

Pair Corralation between HUMANA and Franklin Adjustable

Assuming the 90 days trading horizon HUMANA INC is expected to generate 10.35 times more return on investment than Franklin Adjustable. However, HUMANA is 10.35 times more volatile than Franklin Adjustable Government. It trades about 0.25 of its potential returns per unit of risk. Franklin Adjustable Government is currently generating about 0.12 per unit of risk. If you would invest  7,944  in HUMANA INC on October 23, 2024 and sell it today you would earn a total of  500.00  from holding HUMANA INC or generate 6.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

HUMANA INC  vs.  Franklin Adjustable Government

HUMANA INC

Risk-Adjusted Performance

6 of 100

Modest

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

Franklin Adjustable

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Adjustable Government are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Franklin Adjustable 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 Franklin Adjustable

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

The idea behind HUMANA INC and Franklin Adjustable Government 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.