Correlation Between HUMANA and Nuveen Georgia

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

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

Diversification Opportunities for HUMANA and Nuveen Georgia

-0.07

Correlation Coefficient

HUMANA  Nuveen Georgia

Good diversification

The 3 months correlation between HUMANA and Nuveen is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Nuveen Georgia Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Georgia Municipal 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 Nuveen Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Georgia Municipal has no effect on the direction of HUMANA i.e., HUMANA and Nuveen Georgia go up and down completely randomly.

Pair Corralation between HUMANA and Nuveen Georgia

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Nuveen Georgia. In addition to that, HUMANA is 2.48 times more volatile than Nuveen Georgia Municipal. It trades about -0.15 of its total potential returns per unit of risk. Nuveen Georgia Municipal is currently generating about -0.31 per unit of volatility. If you would invest  991.00  in Nuveen Georgia Municipal on October 9, 2024 and sell it today you would lose (17.00) from holding Nuveen Georgia Municipal or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

HUMANA INC  vs.  Nuveen Georgia Municipal

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Nuveen Georgia Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Georgia Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Georgia 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 Nuveen Georgia

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

The idea behind HUMANA INC and Nuveen Georgia Municipal 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.