Correlation Between HUMANA and IShares Morningstar

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

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

Diversification Opportunities for HUMANA and IShares Morningstar

-0.49

Correlation Coefficient

HUMANA  IShares Morningstar

Very good diversification

The 3 months correlation between HUMANA and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and iShares Morningstar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar Mid 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar Mid has no effect on the direction of HUMANA i.e., HUMANA and IShares Morningstar go up and down completely randomly.

Pair Corralation between HUMANA and IShares Morningstar

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the IShares Morningstar. In addition to that, HUMANA is 1.24 times more volatile than iShares Morningstar Mid Cap. It trades about -0.18 of its total potential returns per unit of risk. iShares Morningstar Mid Cap is currently generating about 0.1 per unit of volatility. If you would invest  7,484  in iShares Morningstar Mid Cap on September 13, 2024 and sell it today you would earn a total of  294.00  from holding iShares Morningstar Mid Cap or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

HUMANA INC  vs.  iShares Morningstar Mid Cap

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

iShares Morningstar Mid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Mid Cap are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, IShares Morningstar is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HUMANA and IShares Morningstar

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

The idea behind HUMANA INC and iShares Morningstar Mid 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.