Correlation Between HUMANA and Investcorp Europe

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

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

Diversification Opportunities for HUMANA and Investcorp Europe

-0.72

Correlation Coefficient

HUMANA  Investcorp Europe

Pay attention - limited upside

The 3 months correlation between HUMANA and Investcorp is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Investcorp Europe Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Europe 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 Investcorp Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Europe has no effect on the direction of HUMANA i.e., HUMANA and Investcorp Europe go up and down completely randomly.

Pair Corralation between HUMANA and Investcorp Europe

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Investcorp Europe. In addition to that, HUMANA is 1.63 times more volatile than Investcorp Europe Acquisition. It trades about -0.15 of its total potential returns per unit of risk. Investcorp Europe Acquisition is currently generating about 0.18 per unit of volatility. If you would invest  1,093  in Investcorp Europe Acquisition on August 31, 2024 and sell it today you would earn a total of  62.00  from holding Investcorp Europe Acquisition or generate 5.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

HUMANA INC  vs.  Investcorp Europe Acquisition

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 unsteady 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.

Investcorp Europe

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Europe Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Investcorp Europe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Investcorp Europe

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

The idea behind HUMANA INC and Investcorp Europe Acquisition 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.