Correlation Between HUMANA and Needham Aggressive

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

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

Diversification Opportunities for HUMANA and Needham Aggressive

-0.42

Correlation Coefficient

HUMANA  Needham Aggressive

Very good diversification

The 3 months correlation between HUMANA and Needham is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Needham Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Aggressive 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 Needham Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Aggressive Growth has no effect on the direction of HUMANA i.e., HUMANA and Needham Aggressive go up and down completely randomly.

Pair Corralation between HUMANA and Needham Aggressive

Assuming the 90 days trading horizon HUMANA INC is expected to under-perform the Needham Aggressive. But the bond apears to be less risky and, when comparing its historical volatility, HUMANA INC is 1.59 times less risky than Needham Aggressive. The bond trades about -0.18 of its potential returns per unit of risk. The Needham Aggressive Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,523  in Needham Aggressive Growth on September 13, 2024 and sell it today you would earn a total of  322.00  from holding Needham Aggressive Growth or generate 7.12% 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.  Needham Aggressive Growth

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.

Needham Aggressive Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Needham Aggressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HUMANA and Needham Aggressive

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

The idea behind HUMANA INC and Needham Aggressive 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.