Correlation Between HUMANA and AB High

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

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

Diversification Opportunities for HUMANA and AB High

0.03

Correlation Coefficient

HUMANA  AB High

Significant diversification

The 3 months correlation between HUMANA and HIDV is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and AB High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB High Dividend 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 AB High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB High Dividend has no effect on the direction of HUMANA i.e., HUMANA and AB High go up and down completely randomly.

Pair Corralation between HUMANA and AB High

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the AB High. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.14 times less risky than AB High. The bond trades about -0.05 of its potential returns per unit of risk. The AB High Dividend is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,288  in AB High Dividend on October 9, 2024 and sell it today you would lose (1.00) from holding AB High Dividend or give up 0.01% of portfolio value over 90 days.

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

HUMANA INC  vs.  AB High Dividend

HUMANA INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 4 (%) 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.

AB High Dividend

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AB High Dividend are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, AB High is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HUMANA and AB High

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

The idea behind HUMANA INC and AB High Dividend 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.