Correlation Between HUMANA and Hartford Emerging

Can any of the company-specific risk be diversified away by investing in both HUMANA and Hartford Emerging 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 Hartford Emerging 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 Emerging, you can compare the effects of market volatilities on HUMANA and Hartford Emerging 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 Hartford Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Hartford Emerging.

Diversification Opportunities for HUMANA and Hartford Emerging

0.63

Correlation Coefficient

HUMANA  Hartford Emerging

Poor diversification

The 3 months correlation between HUMANA and Hartford is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and The Hartford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Emerging 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 Hartford Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Emerging has no effect on the direction of HUMANA i.e., HUMANA and Hartford Emerging go up and down completely randomly.

Pair Corralation between HUMANA and Hartford Emerging

Assuming the 90 days trading horizon HUMANA is expected to generate 1.31 times less return on investment than Hartford Emerging. In addition to that, HUMANA is 1.86 times more volatile than The Hartford Emerging. It trades about 0.05 of its total potential returns per unit of risk. The Hartford Emerging is currently generating about 0.13 per unit of volatility. If you would invest  417.00  in The Hartford Emerging on December 30, 2024 and sell it today you would earn a total of  14.00  from holding The Hartford Emerging or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

HUMANA INC  vs.  The Hartford Emerging

HUMANA INC

Risk-Adjusted Performance

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.

Hartford Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Emerging are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Emerging 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 Hartford Emerging

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

The idea behind HUMANA INC and The Hartford Emerging 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.