Correlation Between HUMANA and FT Vest

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

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

Diversification Opportunities for HUMANA and FT Vest

-0.2

Correlation Coefficient

HUMANA  FT Vest

Good diversification

The 3 months correlation between HUMANA and FDND is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Dow has no effect on the direction of HUMANA i.e., HUMANA and FT Vest go up and down completely randomly.

Pair Corralation between HUMANA and FT Vest

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the FT Vest. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 2.01 times less risky than FT Vest. The bond trades about -0.01 of its potential returns per unit of risk. The FT Vest Dow is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,921  in FT Vest Dow on October 9, 2024 and sell it today you would earn a total of  361.00  from holding FT Vest Dow or generate 18.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.4%
Values	Daily Returns

HUMANA INC  vs.  FT Vest Dow

HUMANA INC

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FT Vest Dow

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Dow are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, FT Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and FT Vest

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

The idea behind HUMANA INC and FT Vest Dow 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.