Correlation Between HUMANA and VanEck Robotics

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

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

Diversification Opportunities for HUMANA and VanEck Robotics

0.5

Correlation Coefficient

HUMANA  VanEck Robotics

Very weak diversification

The 3 months correlation between HUMANA and VanEck is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and VanEck Robotics ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Robotics ETF 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 VanEck Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Robotics ETF has no effect on the direction of HUMANA i.e., HUMANA and VanEck Robotics go up and down completely randomly.

Pair Corralation between HUMANA and VanEck Robotics

Assuming the 90 days trading horizon HUMANA INC is expected to generate 1.15 times more return on investment than VanEck Robotics. However, HUMANA is 1.15 times more volatile than VanEck Robotics ETF. It trades about 0.25 of its potential returns per unit of risk. VanEck Robotics ETF is currently generating about 0.28 per unit of risk. If you would invest  7,954  in HUMANA INC on October 25, 2024 and sell it today you would earn a total of  490.00  from holding HUMANA INC or generate 6.16% return on investment over 90 days.

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

HUMANA INC  vs.  VanEck Robotics ETF

HUMANA INC

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 6 (%) 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.

VanEck Robotics ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Robotics ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, VanEck Robotics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HUMANA and VanEck Robotics

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

The idea behind HUMANA INC and VanEck Robotics ETF 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.