Correlation Between HUMANA and The Hartford

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

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

Diversification Opportunities for HUMANA and The Hartford

-0.15

Correlation Coefficient

HUMANA  The Hartford

Good diversification

The 3 months correlation between HUMANA and The is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of HUMANA i.e., HUMANA and The Hartford go up and down completely randomly.

Pair Corralation between HUMANA and The Hartford

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the The Hartford. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.63 times less risky than The Hartford. The bond trades about -0.07 of its potential returns per unit of risk. The The Hartford Growth is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,570  in The Hartford Growth on November 29, 2024 and sell it today you would lose (22.00) from holding The Hartford Growth or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

HUMANA INC  vs.  The Hartford Growth

HUMANA INC

Risk-Adjusted Performance

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

Hartford Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hartford Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, The Hartford 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 The Hartford

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

The idea behind HUMANA INC and The Hartford Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.