Correlation Between HUMANA and Small Pany

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

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

Diversification Opportunities for HUMANA and Small Pany

-0.31

Correlation Coefficient

HUMANA  Small Pany

Very good diversification

The 3 months correlation between HUMANA and Small is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth 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 Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of HUMANA i.e., HUMANA and Small Pany go up and down completely randomly.

Pair Corralation between HUMANA and Small Pany

Assuming the 90 days trading horizon HUMANA INC is expected to generate 37.52 times more return on investment than Small Pany. However, HUMANA is 37.52 times more volatile than Small Pany Growth. It trades about 0.07 of its potential returns per unit of risk. Small Pany Growth is currently generating about 0.07 per unit of risk. If you would invest  8,129  in HUMANA INC on October 4, 2024 and sell it today you would earn a total of  315.00  from holding HUMANA INC or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.55%
Values	Daily Returns

HUMANA INC  vs.  Small Pany Growth

HUMANA INC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUMANA INC are ranked lower than 3 (%) 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 new stock price disturbance, may contribute to short-term losses for the investors.

Small Pany Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Small Pany showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HUMANA and Small Pany

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

The idea behind HUMANA INC and Small Pany Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.