Correlation Between HUMANA and Eagle Small

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

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

Diversification Opportunities for HUMANA and Eagle Small

-0.05

Correlation Coefficient

HUMANA  Eagle Small

Good diversification

The 3 months correlation between HUMANA and Eagle is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Eagle Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Small Cap 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 Eagle Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Small Cap has no effect on the direction of HUMANA i.e., HUMANA and Eagle Small go up and down completely randomly.

Pair Corralation between HUMANA and Eagle Small

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.33 times more return on investment than Eagle Small. However, HUMANA INC is 3.02 times less risky than Eagle Small. It trades about 0.06 of its potential returns per unit of risk. Eagle Small Cap is currently generating about -0.1 per unit of risk. If you would invest  8,186  in HUMANA INC on October 5, 2024 and sell it today you would earn a total of  258.00  from holding HUMANA INC or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

HUMANA INC  vs.  Eagle Small Cap

HUMANA INC

Risk-Adjusted Performance

4 of 100

Very Weak

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.

Eagle Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with HUMANA and Eagle Small

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

The idea behind HUMANA INC and Eagle Small Cap 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.