Correlation Between HUMANA and Regulus Resources

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

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

Diversification Opportunities for HUMANA and Regulus Resources

-0.02

Correlation Coefficient

HUMANA  Regulus Resources

Good diversification

The 3 months correlation between HUMANA and Regulus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Regulus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regulus Resources 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 Regulus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regulus Resources has no effect on the direction of HUMANA i.e., HUMANA and Regulus Resources go up and down completely randomly.

Pair Corralation between HUMANA and Regulus Resources

Assuming the 90 days trading horizon HUMANA INC is expected to generate 0.47 times more return on investment than Regulus Resources. However, HUMANA INC is 2.13 times less risky than Regulus Resources. It trades about -0.09 of its potential returns per unit of risk. Regulus Resources is currently generating about -0.29 per unit of risk. If you would invest  8,067  in HUMANA INC on November 29, 2024 and sell it today you would lose (168.00) from holding HUMANA INC or give up 2.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

HUMANA INC  vs.  Regulus Resources

HUMANA INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Regulus Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regulus Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Regulus Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HUMANA and Regulus Resources

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

The idea behind HUMANA INC and Regulus Resources 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.