Correlation Between HUMANA and Guerrilla

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

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

Diversification Opportunities for HUMANA and Guerrilla

0.16

Correlation Coefficient

HUMANA  Guerrilla

Average diversification

The 3 months correlation between HUMANA and Guerrilla is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF 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 Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of HUMANA i.e., HUMANA and Guerrilla go up and down completely randomly.

Pair Corralation between HUMANA and Guerrilla

Assuming the 90 days trading horizon HUMANA INC is expected to generate 9.29 times more return on investment than Guerrilla. However, HUMANA is 9.29 times more volatile than Guerrilla RF. It trades about 0.07 of its potential returns per unit of risk. Guerrilla RF is currently generating about -0.01 per unit of risk. If you would invest  8,099  in HUMANA INC on October 21, 2024 and sell it today you would earn a total of  87.00  from holding HUMANA INC or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.96%
Values	Daily Returns

HUMANA INC  vs.  Guerrilla RF

HUMANA INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 5 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with HUMANA and Guerrilla

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

The idea behind HUMANA INC and Guerrilla RF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.